Annual Report - Social Security Commission Annual Report 2012... · The books of SSC are audited...

Page | 1SOCIAL SECURITY COMMISSION | AnnuAl RepoRt 2012 - 2013

Annual Report 2012 - 2013

Page | 2 SOCIAL SECURITY COMMISSION | AnnuAl RepoRt 2012 - 2013


1. INTRODUCTION 4

2. GENERAL 62.1 Business profile of the Social Security Commission 62.2 Foreword by the Chairperson 82.3 Statement by the Executive Officer 9-10

3. OVERVIEW OF THE SSC AND ITS EXTERNAL ENVIRONMENT 123.1 SSC’s Mandate 123.2 Principal activities 123.3 Vision, mission, culture, ethics and values 133.4 Operating and organisational structure 143.5 Significant factors affecting the external environment 173.7 Research and Development 21

4. GOVERNANCE REPORT 224.1 Board of Commissioners 224.2 Audit and Risk Committee 234.3 Human Resource Committee 244.4 Investment Steering Committee 244.5 National Pension Fund Committee 244.6 Corporate Governance 254.7 Risk Management Statement 25

5. PERFORMANCE 265.1 Financial overview 265.1.1 Revenue 265.1.2 Benefits Paid 265.1.3 Operating Expenses 305.1.4 Net Surplus 315.1.5 Statement of Financial Position 315.2 Operational highlights 325.2.1 Narrative of activities during the period under review 32

6. STRATEGY AND RESOURCE ALLOCATION 356.1 SSC’s strategic objectives and strategies in place or to be implemented to achieve the objectives 356.1.1 Stakeholder Perspective 356.1.2 Financial Perspective 356.1.3 Internal Business Perspective 386.1.4 Learning and Growth Perspective 406.2 Resource allocation plans for strategy implementation 41

7. CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE 45

ANNEXURE A: FINANCIAL DISCLOSURE 46

Contents


1. IntroductIon

• The members of the current board, having been appointed on 22 January 2014, endorse this report in so far as the report and its conclusions are aligned to the Audited Financial Statements for the year ended 28 February 2013. As such the report should be read in conjunction therewith.

• The Board notes that the Annual Financial Statements were qualified with respect to the performance of the organisation for the year ended 28 February 2013.

• Subsequent to the appointment of the current board, remedial measures have been implemented

in respect of some of the factors that have contributed to the said audit qualifications. The board further recognises the external challenges faced in the timely conclusion of the Annual Financial Statements for the year under review, which in turn have impacted on this report.

• This report, being the organisation’s first endeavour at an integrated report, deals with an Overview of the SSC and its external environment, Governance, Performance of the Organisation, its Strategy and Resource Allocation and Corporate Social Responsibility. The report will in future be improved in the areas encompassing the organisation’s business model, risks and opportunities and future outlook; as well as the basis of preparation and presentation of the integrated report, and the general reporting guidance.


BusIness profIle of the Social Security Commission


2. GenerAl

2.1 Business profile of the

Social Security Commission Our core business is to provide for the payment of Maternity Leave Benefits, Sick Leave Benefits and Death Benefits to employees and to establish for that purpose the Maternity Leave, Sick Leave and Death Benefits Fund; to provide for the payment of Medical Benefits to employees and to establish for that purpose, the National Medical Benefit Fund; to provide for the payment of Pension Benefits to retired employees and to establish for that purpose the National Pension Fund; to provide for the funding of Training Schemes for disadvantaged, unemployed persons and to establish for that purpose the Development Fund.

Since the inception of the Social Security Commission (SSC) in 1995, it has made a substantial difference in the lives of ordinary workers and their dependants in respect of earnings replacement due to contingencies arising from maternity leave, sick leave and death and work related disabilities, injuries and loss of employment.

Administration

SSC is empowered to administer every Fund established by the Social Security Act or any other Fund assigned to it. For this purpose, SSC must open a current account for every fund it administers. The books of SSC are audited annually by the Auditor-General to ensure that members’ contributions have been properly utilised for approved purposes. Every year, the Minister of Labour and Social Welfare tables the financial statements and reports in Parliament to inform the Nation about the work and achievements of SSC.

SSC derives its funds from membership contributions through compulsory payroll deductions from every employee working and receiving a basic wage, as well as assessments paid by employers based on the wage bill and nature of industry. The responsibility of registration and payment of contributions is vested with employers and they are encouraged to ensure

compliance at all times.

The contributions and assessments are utilised for payment of benefits and meeting administration costs. The net surplus of contributions above benefits and administration costs is invested in a diverse range of financial instruments at different financial institutions within and outside the borders of Namibia. The investment strategies of SSC are guided by an Investment Policy and overseen by an Investment Steering Committee.

Active Funds and Benefits

SSC administers three funds, namely the Maternity Leave, Sick Leave and Death Benefit Fund (“MSD Fund”), Employees’ Compensation Funds (“ECF”) and the Development Fund (“SSC-DF”). Two other Funds, namely the National Pension Fund (“NPF”) and the National Medical Benefit Fund (“NMBF”) are currently not operational as provided for under the Social Security Act.

Maternity Leave, Sick Leave and Death Benefit Fund (“MSD FUND”)

The contribution rate for the MSD Fund is 1.8% of the employee’s basic salary shared on a 50/50 basis by the employer (0.9%) and the employee (0.9%). The MSD Fund offers the following benefits:

Maternity leave benefits to female members equal 100% of basic remuneration for a maximum period of 12 weeks (3 months), with a minimum of N$300 per month and maximum of N$10,000 per month. Sick leave benefits are 75% of basic salary for the first six months (minimum N$225 per month and maximum

BUSINESS PROFILE of the Social Security Commission


BUSINESS PROFILE of the Social Security Commission

N$6 750 per month) and 65% for a further 18 months, at N$195 per month (minimum) and N$5 850 per month (maximum).

Death benefit payable to the family of a deceased member is N$5 000 and the same amount is payable in respect of retirement or permanent disablement.

ii) Accident Fund

The Accident Fund covers all employees earning up to a maximum of N$76 000 per annum for employment related injury through payment of the following:• Medical expenses according to prescribed tariffs.• Temporary incapacity at a rate of 75% of the

earnings.• Permanent incapacity according to the degree of

disablement. Lump-sum payments are done for the degree of disablement up to 30%, whereas monthly pensions are paid for disablement above 30%.

• Widow and children pensions are paid out in all cases of fatal accidents due to an employment

accident or fatal disease.

Employees earning more than N$76 000 per annum can be registered with the Accident Fund, subject to prior approval from SSC.

iii) Development Fund (“SSC-DF”)

The SSC-DF is established by Section 37 of the Social Security Act, 1994 (Act No. 34 of 1994). Its main objects are to:

a. Conduct training and employment schemes approved by the President of the Republic of Namibia for the benefit of socio-economically disadvantaged persons who are unemployed;

b. Grant bursaries, loans and other forms of financial aid to students enrolled at any recognized technical or academic institutions of higher education.

The main function of the SSC-DF is to develop human capital in the country through study support programmes, training and development schemes.


2.2. Foreword by the Chairperson

As indicated in the introduction of this report, the members of the current board, having been appointed on 22 January 2014, endorse this report in so far as the report and its conclusions are aligned to the Audited Financial Statements for the year ended 28 February 2013. As such, the report should be read in conjunction therewith.

SSC was established by the Social Security Act (“SSA”) of 1994 (Act No. 34 of 1994), which also forms the basis of its mandate. The Board of Commissioners has been entrusted to serve and ensure that the aims that are embedded in the mission and tangibly expressed in a vision towards excellence will be fulfilled with a firm resolve and commitment towards governance and effectiveness principles and a focused strategy.

In accordance with international practice and the Social Security Act, the governance structure of the SSC is tri-partite in nature, with equal representation of the Government, Employers and Employees as well as an independent Chairperson.

At this juncture, I want to reassure our stakeholders that the Board which was appointed, on 22 January 2014, as well as the entire rank and file of SSC is serving the nation that has entrusted us to do full justice to the purpose of furthering social security and development in Namibia. At the same time we apply this orientation within the context of a very consciously applied social security orientation and aims. We take our role very seriously and persistently want to live up to the promise we have made that is reflected in our Vision and Mission statements.

Bishop (Emeritus) Zephania KameetaChairperson

Bishop (Emeritus) Zephania KameetaChairperson


2.3 Statement by the Executive Officer

SSC continues to play a fundamental role in furthering the social security objectives within the broader Namibian development aims, while establishing the highest possible inclusivity and benefits that will serve as an effective barrier to social regression and further general social stability.

During the period under review, there was a leadership vacuum after the suspension of the Executive Officer in December 2012. Despite this vacuum, the Commissioners and Management managed to keep SSC afloat. While the first years of the establishment were faced with significant challenges, difficulties and set-backs, SSC has now developed to a point where the purpose and long-term vision have become much more focused in the minds of those that serve it.

SSC remains firmly focused on growing its revenue and membership base, ensuring legal compliance within the institution and by its members and Namibian employers, effectively managing business risks, and delivering customer - centric services. At the same time, our staff remains the most important asset of the institution and SSC wants to ensure that they are equipped with the necessary skills and knowledge to carry out SSC’s strategic objectives.

We are most grateful to the leadership and input of the Honorable Minister of Labour and Social Welfare and her Ministry officials. We are appreciative of our key stakeholders who, besides sharing with us their ideas, have availed Commissioners to serve on the Social Security Board of Commissioners. I am also grateful to the Commissioners and their commitment to the business activities of SSC; their input through the year assisted our institution in moving forward with confidence.

Thank you to the staff of SSC who has made it possible for SSC to continue with its mandate. We remain committed to ensuring that Namibia’s safety net remains strong and our social insurance mechanism relevant. The fact that SSC is essentially a non-profit organisation operating within a defined mandate and within a “captive” market means that our resolve to organize and manage SSC in a businesslike manner becomes even more compelling.

Our strategy map defines our direction and scope of organisational engagement and forms the basis for determining the distinct targets we want to reach in various areas of our organisational scope of operation and management. Our aims are lofty, but we are convinced that we can aspire to the highest standards of professionalism in

Kenandei TjivikuaExecutive Officer


the wider social security field. This will require the integration of high standards of workmanship and deep commitment in the way that we approach our work and consistently achieve results in the service of our various stakeholders.

We are embarking on a process that will require of us concerted achievement and internalisation of professionalism and effectiveness principles through well-conceived and systematic strategic planning. Furthermore, we want to ensure follow-through of definite and clear targets that will allow us to align key management and business processes within such a strategic framework.

We believe that if we apply ourselves in a focused manner, we will become much more proficient at what we do and increasingly we will set higher benchmarks for ourselves. This will make us more effective as individuals and will also enable us to optimize our organisational resources towards our mission and vision.

We will become better at capturing the future by effectively managing the present. With our resolve firmly focused on our vision, we will make ourselves and those we serve proud of what we will achieve. In future years we will have travelled this road and will be able to say: We are a world-class provider of social security benefits to the Namibian Workforce and other Beneficiaries!



overvIewof the Social Security and its external environment


3. overvIew of tHe ssc And Its eXternAl envIronMent

3.1 SSC’s mandate

The SSC is mandated to register new members, maintain the current membership, processing of claims, and to authorize payments for benefit claims under the Maternity, Sick and Death benefits Fund, in terms of the Social Security Act, Act 34 of 1994, as well as under the Accident Fund and Accident Pension Fund (“APF”) as per Employees’ Compensation Act, Act 30 of 1941. SSC is further responsible for the coordination and supervision of Branches and Satellite Offices in the country, with the view of providing effective and efficient services to our clients through the provision of services.

In view of the above, SSC embarks upon the decentralization of services, by way of reaching out to new and existing customers through expanding the network of its offices to all the regions of Namibia.

3.2 Principal activities

SSC’s principal activity is to contribute to the social and economic development of Namibia. SSC performs the administrative tasks of the Maternity, Sick and Death Benefit Fund, the Employees’ Compensation Fund and the Development Fund. SSC was established under the Social Security Act, 34 of 1994.

The Maternity, Sick and Death Benefit Fund’s principal activity is to provide a short-term social insurance scheme for all persons who work and receive a basic wage in Namibia. The Fund was established under the Social Security Act 34 of 1994.

The Employees’ Fund’s principal activity is to compensate for disability caused by accidents to or industrial diseases contracted by employees in the course of their employment or for death resulting from such accidents or diseases. The Fund was established under the Employees’ Compensation Act 30 of 1941.

The Development Fund’s principal activity is to contribute to the social and economic development of Namibia. The Fund conducts training schemes and employment schemes for the benefit of socio-economically disadvantaged persons. The Fund also grants bursaries, loans and other forms of finance to students enrolled at any recognised technical and academic institutions of higher learning. The Fund was established under the Social Security Act 34 of 1994.


3.3 vision, Mission and core values

vision statement

To be a world class provider of social security benefits to the Namibian workforce and other beneficiaries by 2020.

Mission statement

To professionally administer the funds for the efficient and sustainable provision of social security benefits to the Namibian workforce and other beneficiaries, consistently expand coverage and benefits, meaningfully contribute towards socio-economic development and improve quality of life.

core values

the ssc’s core values are:

Integrity: We are always honest in everything we do and never compromise on ethical or moral principles.

Efficiency: We do things right the first time, every time.

Accountability: We take responsibility of all our actions and shall account for it. We accept the consequences of our actions.

Customer centric: Customer satisfaction is our primary concern therefore we deliver on our service promises.

Mutual respect and trust: We value the many things that make us different from one another and therefore we shall always uphold the constitutional rights of all people.


Vemunjengua KavariGM: Finance

Mpingana Kalimba-Msimuko Manager: Investments

David KeendjeleGM: Operations

Linda Dumba ChicaluLegal Advisor

Peter Von KhneGM: Corporate Services


Emma GaomasCommission Secretary

Onno AmutenyaGM: Information Technology

Olga KatjiuonguaManager: Development Fund

Rino MurandaHead: Corporate Communications

3.4 operating and organisational structure

executive Management

Uahatjiri NgaujakeManager: Research & Development


ssc organogram – Head office

Head: Corporate

Communication

Manager: Research &

Development

Manager: MIS

Manager: Development

Fund

Manager: Internal Audit

& Risk Mangement

CommissionSecretary

Legal AdvisorGeneral Manager: Finance

Manager: Investments

General Manager: Operations

General Manager:

Corporate Services

General Manager:

IT

ChiefCompliance

Officer

Executive Assistant

Executive Officer

Board of Commissioners


operAtIonAl reportof the Social Security Commission


The year 2012 was characterized by a fragile and weak global economy largely due to the sovereign debt crisis in the Euro Area and fiscal challenges in the United States of America (“USA”). These uncertainties have resulted in slow growth in the USA, while the Euro Area entered a recession in the second half of 2012. Moreover, slow growth and uncertainty in advanced economies affected emerging markets and developing economies, through both trade and financial channels. Going forward, the pending negotiations on debt ceiling and spending cuts in the USA, and the unresolved debt crisis in the Euro Area constituted downside risks to the global economy.

Despite the estimated slowdown in global growth from 3.9 percent in 2012 to 3.2 percent in 2013, activity in the Namibian economy remained resilient during 2013. In this context, real GDP growth for Namibia is estimated to have slowed mildly to 4.6 percent in 2013 compared to 4.8 percent in 2012 (source: Bank of Namibia Annual Report 2013). Underpinning this resilient growth was positive performance in primary industries, more specifically mining activities. Furthermore, secondary industries, in particular the construction sector, also contributed significantly to overall growth.

Tertiary industries slowed due to the slow growth of the public administration and defence sectors. On the external sector’s side, the current account balance registered a deficit, mainly due to a significant deterioration of the trade balance. Inflation averaged 6.5 percent during 2013, up from 5.0 percent in 2012. The acceleration in overall inflation was underpinned by high inflation rates for food and transport that peaked at 11.0 percent and 8.0 percent, respectively.

3.5.2 Legal Compliance

The legal compliance environment remained a challenge during 2012/2013. The Legal Division conducted various inspections around the country, the purpose of which was to ensure that employers and employees are registered and contributions and assessments are paid over to SSC.

3.5.3 Contributions and Assessment Compliance

2011/2012 2012/2013

N$5,513,833 N$7,226,333

Collections were up 76% year-on-year mainly due to increased integrated inspections undertaken during the year.

The major non-compliance issues were:

1. Failure to pay contributions and assessments2. Failure to register and terminate employees 3. Failure to register as an employer4. Failure to notify SSC of an accident

Criminal and civil cases were instituted in instances where employers have failed to comply with the law.

3.5.4 Review of SSC’s Legal Framework

The Social Security Act was enacted in 1994, while the Employees’ Compensation Act was enacted in 1941 and amended in 1995. As the face of industry has changed over the years, these Acts were not amended

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3.5 Significant factors affecting the external environment

3.5.1 Financial Markets


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to keep up with today’s fast changing socio - economic environment.

As part of the process of reviewing its enabling legal framework, in October 2013, SSC held its first ever consultative workshop with Management and Board for the purposes of soliciting inputs on the legal provisions of the Acts. The reason for the review is quite straight forward, in that, with the implementation and execution of these laws, it became apparent that certain amendments were necessary for the efficient and effective implementation of the mandate assigned to SSC. SSC thus considered it important to address these shortcomings in its principle governing laws, namely the Social Security Act 34 of 1994 and the Employees’ Compensation Act 30 of 1941.

The amendments are necessary to:

a) Fill the legislative gapsb) Make the laws current, which is to bring them

up to date with the latest developments and trends in the law.

c) Remove barriers imposed in terms of the Acts, because under the existing section 20 of the Social Security Act, a self-employed person can only register with SSC if they do not employ any other person. This provision is very prohibitive because in practice many self-employed persons also employ other persons. The legislature could not have foreseen in 1994 that the informal sector would explode in quite the way it did. The result is that the Acts, in some instances do not adequately cover employees in the informal sector. This provision in fact goes against the spirit of one of the key strategic objectives of SSC which relates to the extension of coverage to the informal sector and the uncovered workers in Namibia and thus justifies the amendment process that SSC is engaged in now.

d) Streamline operational needs and the needs of stakeholders on the ground.

e) To cater for the growth that will be brought about by the operationalization of the two outstanding Funds, namely the National

Medical Benefit Fund and the National Pension Fund as well as the establishment of the Unemployment Insurance Fund, currently being explored either as a stand-alone statute or incorporated under the Social Security Act.

f ) Introduce and reflect prevention and integration as a complementary function under the two principle Acts.

With this in mind, SSC has embarked on the process of amending the Social Security and Employees’ Compensation Acts to ensure that the Acts remain relevant in the face of change. The amendments process will take two phases, with the outstanding Funds and the envisaged Unemployment Insurance Fund forming part of Phase 2 of the Project. Whereas, Phase 1, will focus more on effecting immediate changes to the legal framework to improve operational efficiency and effectiveness in line with new technology, national needs and international developments. Further workshops are planned with the line Ministry, Board and stakeholders in 2014.

3.5.6 Amendments under the Employees’ Compensation Act 30 Of 1941

On 20 September 2013, the following changes, which are effective from 1 March 2013, were gazetted:

• the amount that defines the employees thatare required to contribute to the Employees’ Compensation Fund (ECF) in terms of Section 3 (2) (b) of the Employees’ Compensation Act, (Act No. 30 Of 1941, as amended) was increased from N$ 76 000 p.a. (Seventy Six Thousand Namibia Dollars per annum) to N$ 81 300 p.a. (Eighty One Thousand Three Hundred Namibia Dollars per annum).

• the maximum amount of wages on whichassessments of an employer shall be calculated by SSC in terms of Section 69 (4) of the Employees’ Compensation Act, (Act No. 30 of 1941, as amended) was increased from N$ 66 000 p.a. (Sixty Six Thousand Namibian Dollars per annum) to N$ 70 600 p.a. (Seventy Thousand and Six Hundred Namibian Dollars per annum).


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On 27 September 2013, the Tariff of Fees for Medical Aid under section 69 of the Employees’ Compensation Act, effective March 2013 was also gazetted.

3.5.7 Co-ordinated compliance and collaboration with Ministries

During the period, SSC sought to establish relationships with Government Ministries in order to ensure compliance across different sectors. To this end, SSC has approached the Ministries of Finance, Trade and Industry, Fisheries, Local Government and Housing,

Mines and Energy and the City of Windhoek to assist in ensuring that employers are compliant with the laws it administers.

SSC has also embarked on a program to strengthen its relationship with its line Ministry and ensure that effective compliance inspections are carried out. To this end, SSC and the Ministry of Labour and Social Welfare have undertaken joint inspection visits to ensure compliance with both social security and employment laws.

3.5.8 Legal Education and Training

In addition to the legal framework amendment workshop, which also served as a refresher workshop for both Management and Board on the provisions of the governing Acts, the Division conducted workshops with Compliance Officers and Branch Managers on the Compliance Policy and Procedure Manual, to solicit inputs before it is approved by Board.

The Division also held an information sharing session with Management to explain the provisions of the Conflict of Interest Policy, which was developed to ensure that conflict of interest risk is managed within the SSC.

3.6 Departmental reports

Corporate Communication

During the period under review, stakeholder communication was aimed at rebuilding and repositioning the image of SSC. SSC participated at various trade fairs and shows, career fairs, staged events (such as open days), conducted stakeholder information workshops and provided timely and accurate information.

SSC with its mobile van “SSC on Wheels”, equipped with state of the art equipment and designed as an office, travelled extensive trips across the country to the remotest areas to host open days where information and assistance were provided. SSC’s website and intranet received a new “face lift” to keep staff members and external stakeholders abreast


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of developments in SSC as well as doing business via the website. Updates on the sites are ongoing. During the period under review, SSC introduced and implemented a Brand Manual and branding of all vehicles with new signage in line with the brand manual commenced during the review period. SSC responded to various media enquiries on topical issues such as improved benefits, benefit payments, card updates, information workshops and donations, on radio, television and the print media.

SSC commenced with social media such as Twitter, Facebook and also has its corporate video on YouTube to continuously interact with stakeholders. Twitter and Facebook are updated regularly to provide information and news as well as responding to enquiries. An external publication (Social Span newsletter) is published quarterly for stakeholders for information sharing.

Information and Technology Department

The IT environment has tremendously evolved and this brought along a number of challenges; including, extending IT Services to new areas, implementing new technologies, and so on. With change, however, comes opportunity. Technological advances have enabled us to realise new avenues in terms of membership, new sectors, and new geographies. The Department has contributed to carbon footprint reduction through the adaption of electronic meeting agenda by deploying enabling facilities.

SSC is driven by IT and the delivery of efficient service to the stakeholders depends on the stability of the IT environment. At the beginning of the review period, SSC under the advice of the Information Communication and Technology Management Committee (“ICTMCo”) engaged the internal core subject matter experts with a view to gain a common understanding and emphasize the core business goals going forward. Having gone through this process, a number of IT risks were agreed upon, which would become the focus of the department in the short to medium term. The top focus areas identified included:

Integration of IT within business processes

IT investment decision making

Data(base) Integrity

System capacity and integrity

Ageing of infrastructural software

IT expertise and skills

Operationally, SSC ICT systems are fully decentralised in all processing centres, and enables real-time data processing. This has enabled the various offices to capture data and process claims at source providing the ability and contributing better processing turnaround times.

SSC continued to enhance its own internal call centre, supported by software that ensure the effective operation of this environment and plans are underway to source a system with automatic issue escalation capability for effective service levels provisioning.

Noting the crucial role of ICT processes in operations, the ICT Department spearheaded the Business Process Mapping (BPM) project by coordinating with various stakeholders, throughout SSC, in assessing


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and re-engineering the key business processes. The project revealed key benefits that can be realised and harnessed in the following review periods.

These include, amongst others:

Improved integrationImproved data accuracyOn-line functionalityImproved workflow and rules-based functionsImproved access to information

Improved controls and risk managementImproved validation and quality checks

3.7 Research and Development

The Research and Development Division has been involved in the following activities during the year 2012/13:

3.7.1 National Medical Benefit Fund (“NMBF”) and National Pension Fund (“NPF”)

A core function of SSC is to ensure that all Namibian workers have access to equitable health care. In this regard the Social Security Act (“SSA”) provides for the establishment of the NMBF, which is intended to ensure that all employed persons in Namibia are members of a medical aid fund and hence have access to healthcare facilities and services irrespective of their income levels. Moreover, aiming at ensuring that all workers in Namibia maintain sustained levels of income in old age, the SSA provides for the establishment of the National Pension Fund (“NPF”).

During the period under review, SSC has been working towards the establishment of these two Funds, as per its mandate. The institution has engaged consultants to conduct the necessary research work needed to inform the design and the implementation of the Funds. Also, high level consultations with key stakeholders have taken place and SSC at present is awaiting final input from some of the stakeholders before the reports for

the two projects can be finalized and be submitted to the line Minister for further consideration.

It is expected that the introduction of these outstanding Funds will add value to the existing product offering of SSC in the form of expanded social protection coverage.

3.7.2 New Initiatives (Return To Work (“RTW”), Occupational Health and Safety (“OHS”) and Unemployment Insurance (“UI”)

In order to reduce the experienced increases in the number of work-related injuries and illnesses (and the related costs) and provide for a healthier and more productive workforce in Namibia, SSC has undertaken to investigate the viability of introducing Occupational Health and Safety and Return- to-Work programs. Furthermore, in order to mitigate destitution among Namibians resulting from job losses, SSC has resolved to explore introducing an Unemployment Insurance, which is an unemployment compensation programme that provides compensation to the insured person, for the loss of income resulting from involuntary unemployment.

In this regard, the organisation has resolved to learn from other countries through study visits to a number of African and Asian countries to gain insights from the experiences of those countries and use such insights for benchmarking and costing in the possible implementation of these programs.

3.7.3 Social Protection Floors Project

The 101st International Labour Organization (“ILO”) Conference of 2012, made concrete recommendations on the Social Protection Floor (“SPF”) which countries need to adopt in order to achieve the ideals of the SPF. The SPF is aimed at reducing poverty and inequality whilst ensuring that citizens enjoy a decent standard of living. Namibia as a country is committed to implement the recommendations on the SPF and SSC will play a central role in implementing these recommendations.

In this light, SSC will collaborate with the ILO on a


project aimed at conducting an assessment of the performance of existing social protective measures in Namibia, designing new schemes to fill possible gaps and proposing how such schemes may be financed. The institution has during this year built internal capacity to engage in and guide this process to ensure that its outcome is a fine reflection of the Namibian setting and mitigating strategies are formulated. 3.7.4 Informal Sector Project

SSC being an integral part of the social security regime of Namibia has initiated the process of looking at how social security can be extended to the informal sector in line with Recommendation 202 of the International Labour Organisation (“ILO”).

4. GovernAnce report

The Board of Commission of the SSC acknowledges that good governance is the key for effective social security schemes and therefore conducts its business in compliance with the enabling Act, the State-owned Enterprise Governance Act, 2006 (Act No. 2 of 2006), as well as non-binding codes and standards of Governance Principles for South Africa.

4.1 Board of Commissioners

The Board of Commissioners is composed of tripartite representation appointed by the Minister of Labour and Social Welfare who also designates a Chairperson. The Government is represented by three Ministries namely the Ministries of Finance, Labour and Health and Social Services, who each nominate a representative. The labour sector, represented by the trade unions also nominates three representatives. The remaining representation is from the employers’ sector, which also nominates three representatives. Each set of three representatives must consist of at least one female. The Commissioners hold office for a period of three years and are eligible for re-appointment upon expiry of the term. The Executive Officer initiate and control the strategic planning and operational effectiveness of SSC through compliance to governance and legislative

frameworks, as well as implementing and developing world-class operating systems to achieve all objectives.

The Commissioners are committed to discharging their duties, responsibilities and accountability in accordance with the principles of Good Corporate Governance as it is believed that effective governance of social protection schemes is an essential prerequisite for the enhancement of the coverage and effectiveness of social protection. Efficient governance can make a lasting difference.

Role and functions of the board

The Board of Commissioners provides effective leadership based on the ethical foundation. The Board is responsible for the overall policy objectives of the Government of Namibia, to ensure that SSC operates as required by the enabling Act. The Board therefore has delegated authority to ensure that there are principles governing the delegation of responsibilities among SSC, the delegated Committees, Management and staff. The primary role of the Board is stewardship of the interests of all stakeholders namely:

• ThemembersoftheFunds• TheGovernment• TheEmployers• TheEmployeesofSSC• ThePublic

The attainment of this role entails setting overall objectives and monitoring the performance of management in their pursuit of these objects.

In adherence to good corporate governance, the Board consistently applies tests of fairness, accountability, responsibility and transparency and is also responsive and responsible towards the identified stakeholders.

Commissioners, Management and Staff are expected to observe high ethical standards in dealing with all the stakeholders, customers, investors and the community. All members of the SSC’s board are non-executive.Attendance of meetings by the Commissioners from 1 March 2012 to 28 February 2013 was as follows;

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Commissioner Start ofTerm

End ofTerm

Board MeetingsAttended

AuditCommittee

InvestmentCommittee

Staff & Remuneration

National Pension Fund

Mr B. R. R. Kukuri 02 Jan 12 31 Oct 2013 10 1 5 - 5

Mr A. E. Biwa 02 Jan 12 31 Oct 2013 6 3 - - 2

Ms O.L.M. Kutenda 02 Jan 12 31 Oct 2013 9 - 3 1 -

Mr H. Shikongo 02 Jan 12 31 Oct 2013 8 - - 6 -

Mr D Wright 02 Jan 12 31 Oct 2013 10 1 5 - 5

Ms E. Breuer 02 Jan 12 31 Oct 2013 10 5 - - -

Ms C. U. Pandeni 02 Jan 12 31 Oct 2013 10 - - - 5

Ms A. Zamuee 02 Jan 12 31 Oct 2013 10 - - 6 -

Ms H. H. Kapenda 02 Jan 12 31 Oct 2013 8 1 - 5 -

Mr T.J. //Garoëb 02 Jan 12 31 Oct 2013 10 6 4 - 1

The Board delegates certain functions to well-structured committees but without abdicating its own responsibilities. The committees include;

• Audit and Risk Committee;• Human Resources Committee;• Investments Committee; and• National Pension Fund and National Medical Benefit Fund Committee.

4.2 Audit and Risk Committee

The Audit Committee has been appointed by the Board of Commissioners to assist the Board in fulfilling its oversight responsibilities.

The Committee was made up of the following members:

Mr. A.E. Biwa (Chairperson) Ms. E.Breuer Mr. J. //Garoëb

The Audit Committee was established primarily to assist the board in overseeing the;

• quality and integrity of the SSC’s integrated reporting, incorporating the financial statements and sustainability reporting, and public announcements in respect of the financial results;

• review of work done by actuaries;• the qualification and independence of the external auditors for the SSC;• the scope and effectiveness of the external audit function for the SSC;• the effectiveness of the SSC’s internal controls and Internal Audit function;• efficient use of the SSC’s resources;• compliance with legal and regulatory requirements to the extent that it might have an impact in financial

statements.


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4.3 Human Resources Committee

The Committee is responsible for developing an overall human resource strategy encompassing all members of staff, which should support the attainment of the overall objectives and strategies of the SSC. The Committee was established primarily to assist the board in overseeing;• SSC’s general policy on human resources;• prioritise the allocation of human resources; and• approval of human resource strategy.

The Committee was made up of the following members: Ms. A. Zamuee (Chairperson) Ms. H. Kapenda Mr. H. Shikongo 4.4 Investment Steering Committee

The Committee was made up of the following members: Mr. B. R. R. Kukuri (Chairperson) Mr. D. Wright Mr. TJ //Garoëb Ms. O. L. M. Kutenda

SSC recognizes that funds must be invested prudently and responsibly. As a result, SSC observes strict rules regarding the safety and control of investments as per the Investment Policy.

SSC’s investment portfolio is managed with the objectives of providing liquidity to meet benefit payments and operational expenditures achieving long-term growth and preserving capital.

The Committee is charged with a responsibility to:

• Develop investment strategies and oversee investment activities.

• Review the comprehensive report on investments to be submitted to the Board on the quarterly basis by the Executive Officer. Such a report must contain an analysis of the investment portfolio, presenting performance indicators for the preceding quarter and outlining any developments, economic or otherwise, that

might be of interest to the Board. The report must also highlight any changes that might be contemplated for the investment strategy due to changes in economic and other factors.

• Recommend to the Board the appointment of Asset Managers, Actuaries and Custodians for the Fund.

• Review the performance of Asset Managers and custodians periodically and advise the Board of Commissioners of the results of these reviews.

• Develop the Development Fund (SSC-DF) strategic goals and ensure that effective mechanisms for monitoring and evaluation of funded projects are in place to access performance of all funded projects.

• Ensure that the SSC-DF Division has the necessary resources to achieve its goals.

• Recommend SSC-DF projects to the Board for approval.

4.5 National Pension Fund Committee

The National Pension Fund Committee is established in terms of Section 11 (1) of the Social Security Act, 1994 (Act No. 34 of 1994). The main objective of the Committee is to oversee the projects relating to the conducting of the strategic research on the establishment of the National Pension Fund and its implementation.

The Committee is responsible for:

• Analyzing and deliberating on consultants’ research report and recommend to the Board for approval.

• Recommending to the Board for approval, the policy and regulatory framework for the NPF and NMBF.

• Recommending to the Board for approval, the NPF and NMBF operational policy guidelines.

• Consulting different stakeholders to obtain buy –in on the establishment of the NPF and NMBF.

The Committee was made up of the following members: Ms. C. U. Pandeni (Chairperson) Mr. D. Wright Mr. A.E. Biwa


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The Executive Officer and the Executive Management relevant to each Committee attend the Committee meetings on invitation. The Commission Secretary ensures the provision of Commission Secretarial Services to the Board and Board Committees meetings.

Board Remuneration

A member of the Board who is not employed in the public service on a full time basis receives a sitting allowance and retainer fee equal to the fees gazetted by the SOEG Act from time to time.

Board Training and Development

Commissioners attended the following conferences and courses:

• African Corporate Governance Conference in South Africa

• HR Value Creation 2012 Conference• Leading & Managing Exceptional SOEs &

Government Agencies Boards Conference held in Namibia

• Social Security Summer School offered by the International Training Centre (ITC), the training arm of the International Labour Organization (ILO).

4.6 Corporate Governance

Internal Audit

SSC has an Internal Audit function covering its operations at Head Office as well as its branches and satellite offices throughout the country. Internal Audit performs an independent appraisal activity with the full cooperation of the Board and Management. It has the authority to independently determine the scope and extent of work to be performed. Its objective is to carry out audit reviews and internal control advisory activities which are aligned to the key risks in SSC’s business to provide independent assurance to the Board’s Audit Committee on the adequacy and effectiveness of risk management and internal control systems. The Manager: Internal Audit is reporting functionally to the Chairperson of the Audit and Risk Committee with a dotted line of responsibility to the Executive Officer (EO).

Any significant control weaknesses are reported to Management and the Audit and Risk Committee for remedial action. SSC’s management, with the assistance of Internal Audit, follows up on the external auditor’s recommendations as part of their role in reviewing SSC’s system of internal controls.

Internal Controls

SSC maintains a system of internal control that comprises of methods and procedures implemented by Management to safeguard assets, prevent and detect error and fraud, and ensure the accuracy and completeness of accounting records and the timely preparation of reliable financial information. The Board of Commissioners is ultimately responsible for maintaining an adequate system of internal control. Such a system reduces, but cannot eliminate, the possibility of fraud and error.

These controls consist of established written policies and procedures (including a code of conduct to foster a strong ethical climate) which are communicated throughout SSC and mechanisms to ensure compliance. To ensure the success of internal control system, all SSC employees are required to maintain the highest ethical standards.

Nothing has come to the attention of Internal Audit to indicate any material breakdown in the functioning of internal controls, procedures and systems during the year under review.

4.7 Risk Management Statement

In pursuing our strategic objectives, SSC is exposed to multiple risks in the local and global market economy. The Board of Commissioners is responsible for governing risk management processes at SSC in accordance with corporate governance requirements and has approved a risk management framework to be implemented by management. The aim of this framework is to ensure that the extent to which SSC’s strategic and operational objectives are being achieved is understood, that SSC’s risk reporting is reliable and that SSC complies with relevant laws and regulations.


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Into 2013 - 14 (the year ahead), SSC will establish a more formalized enterprise-wide comprehensive risk management process with adequate risk management structures to provide oversight in this respect. SSC will develop a risk management plan and will embark on a process to identify and mitigate emerging risks that it faces. Substantial progress has been made to date in achieving the above objectives. There are still certain components of the process which need to be further developed and embedded and programmes will be put in place to address these.

5. perforMAnce

5.1 Financial overview

SSC operates three Funds namely MSD Fund, ECF and the SSC-DF. Each Fund was established for a specific purpose, hence the reason for separate financial statements for each Fund.

SSC earns its primary revenue from employers’ contributions and assessment income in respect of the MSD Fund and ECF respectively. The SSC-DF is funded from discretionary transfers from free reserves of the MSD Fund as well as contributions from the Government of the Republic of Namibia through the Ministry of Labour and Social Welfare. Our financial overview will mainly cover the two main Funds, namely the MSD Fund and the ECF, although reference will also be made to the SSC-DF at times where necessary.

Financial performance highlights for the year under review:

• Revenue grew by 11%• Benefits paid to the members (including payments for SSC-DF Schemes increased) 11%• Net retained surplus for the year increased by 11%• Growth in total assets 12%• Growth in investments 11%

The above highlights are based on the combined financial results of all the Funds.


5.1.1 Revenue

For the period under review, SSC’s combined revenue from operations was N$376.8 million (2012: N$338.9 million), representing an increase in revenue of 11%. This revenue is made up as follows:

MSD Fund contributions increased by 10% from N$250,7 million to N$280,1 million and ECF assessments increased by 13% from N$80 million to N$90,1 million. Other revenue increased by N$2.4 million, mostly because of a significant recovery of bad debts.

Total primary revenue for SSC has continued to grow over the past five years. Total primary revenue is made up of contributions income and assessment income and it excludes income from government grants. The current year’s total primary revenue was N$ 370.2 million (2012: N$ 334.7 million) also representing an increase of 11%. The graph below shows how the primary revenue has grown over the past five years.

Graphical analysis of primary revenue over the last five years

The increase in primary revenue is mainly a result of salary increases of the members to the Funds as well as more focused compliance initiatives. SSC embarked on strategies to improve compliance to the Acts to ensure it delivers more in line with its statutory mandate.

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5.1.2 Benefits Paid

The total benefits paid to beneficiaries of SSC, including payments in respect of SSC-DF schemes, increased during the year under review from N$162 million to N$179.1 million. The composition of these benefits is as follows:

Benefits paid from the MSD Fund increased by 7% from N$138.4 million to N$148 million and benefits paid from ECF increased by 24% from N$17.5 million to N$21.7 million. The payments in respect of SSC-DF Schemes increased by N$3.3 million as a result of additional payments in respect of Training and Employment schemes.

SSC continuously strives to improve the benefits paid to beneficiaries of the Funds and this is mainly the result for the increases in benefits paid.

Analysis of claims by type

Table 1

MSD Benefits paid by type 2013 2012

Maternity leave 105,981,000 102,673,659

Sick leave 16,969,000 16,868,916

Death benefit 8,465,000 7,575,571

Retirement benefit 16,639,000 11,329,112

Total MSD Benefits paid 148,054,000 138,446,258

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Graphical presentation of table 1

Analysis of the number of MSD Fund claims over the past five years

Table 2

ECF Benefits paid by type 2013 2012

Medical expenses 6,026,000 7,050,629

Compensation payments 5,557,000 1,374,565

Capital pension paid - APF 3,292,000 4,693,417

Pension paid - APF 6,883,000 4,408,324

Total 21,758,000 17,526,935

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Graphical presentation of the table above

Analysis of the number of ECF claims over the past five years

5.1.3 Operating Expenses

SSC is in the process of upgrading its infrastructure in respect of new offices as well as systems to ensure an efficient and effective service delivery to its stakeholders. This exercise is the main reason for the increase in operating expenses of SSC for the period under review. Operating costs increased by 26% from N$130.2 million to N$163.7 million. Management however applies stringent controls to maintain operating expenses. The most significant expenses are depicted by the graphs below.

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Typical for a service oriented organization, employment cost is the biggest operating expense and increased by 13% due to inflationary adjustments as well as new appointments in line with the expansion drive. 5.1.4 Net Surplus

The combined surplus of all the Funds increased by 12% from N$244.6 million to N$272.8 million during the current year. This represents a return on equity of 13% (2012: 13%). The major funds contributed N$248.7 million to the total of all the Funds, (2012: 218.1 million). All the Funds continue to record a net surplus for the year under review. This is in line with all the previous years.

5.1.5 Statement of Financial Position

The combined assets of the Funds grew for the year under review by 12% from N$2.1 billion to N$2.3 billion. The assets in the individual Funds also recorded a growth compared to the previous year. The liabilities of SSC remain relatively low and comprise mainly trade payables and provisions relating to unreported claims as depicted in the graph below.

The assets of the MSD Fund contributes N$1 585 million (2012: N$1 452 million) and the ECF N$573 million (2012: N$476 million) to the total assets of SSC.

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5.2 Operational highlights

5.2.1 Narrative of activities during the period under review

During the period under review, various activities were carried out by different branches and satellite offices. The graph below shows the number of compliance inspections carried out and information sessions conducted in various offices in the regions.

Graphical analysis of activities carried out during the year

During the period, SSC embarked upon the following projects and initiatives that were successfully completed;

• TheassessmentceilinginrespectofEmployees’CompensationFundwasincreasedfromN$72000.00p.a.toN$ 76 000.00 p.a. with effect from 1 March 2013.

• In an effort to increase revenue, SSC introduced a new method of wage returns by way of ElectronicDocumentation Interface (EDI). The system enables employers to submit their monthly contribution files electronically.

• During theperiodunder review,SSCalso introducedSpeedpointsatallofficescountrywide to facilitatecollection of contributions and assessments payment by employers.

Registered Employees and Employers

The number of newly registered employees increased by 11.3% from 417 790 to 465 047 and newly registered employers increased by 14.08% from 46 686 to 53 004. One of the contributing factors to the increase of employers and employees is the conducting of information sessions and compliance inspections carried out. The total number of registered employees and registered employers from all regions has continued to grow over the past five years as explained by the graphs below;

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Graphical analysis of the total number of registered employers (MSD Fund) over the past five years

Graphical analysis of the total number of registered employees over the past five years

MSD Fund benefits paid

The table below shows the number of claims processed under the MSD Fund. The number of MSD Fund claims processed increased by 12.14%, while the monetary value of benefits paid increased by 19.87% in comparison to the previous financial year. The increase in monetary values paid by the fund is an indication of the increasing utilization of SSC benefits by claimants and other beneficiaries. This increase can be attributed to the benefit levels which SSC is continuously improving.

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Table A: MSD Fund Benefit Claims:

2012/13 2011/12 2012/13 2011/12

Benefits Number of Claims

Number of Claims

Change % AmountN$ Amount

N$ Change %

Maternity Leave 23 759 21 165 12.26 117 317 117 97 837 494 19.91

Sick Leave 5 080 4 868 4.36 16 978 059 15 098 687 12.45

Disability/ Retirement 2 824 2 219 27.26 15 075 965 11 063 000 36.27

Death 1 722 1 520 13.29 8 279 488 7 522 702 10.06

Total 33 385 29 772 12.14 157 650 629 131 521 883 19.87

ECF Benefits

SSC administers Employees’ Compensation benefits in trust of the Accident Fund for all registered employers in the private sector. All benefits are paid out of the Accident Fund for the purpose of injury on duty benefits.

The Government of the Republic of Namibia is exempted to contribute to the Accident Fund, but carries all the costs for injury on duty of all civil servants through the budgetary provision of the Ministry of Labour and Social Welfare. SSC handles the administration of the injury on duty claims on behalf of the Ministry of Labour and Social Welfare and in return claims the cost for such an administration on an annual basis.

The section below details the activities of the Employees’ Compensation Fund under the Private and Public sector, respectively.

Table B: ECF Benefit Claims:

2012/13 2011/12 2012/13 2011/12

Benefit Type No of Claims No of Claims Change

%Amount Paid

(N$) Amount Paid (N$) Change %

Medical Expenses 3 314 3 185 4.05 6 819 317 7 944 088 -14.16

Compensation 1 632 1 587 2.84 3 647 857 3 749 545 - 2.71

TOTAL 4 946 4772 3.65 N$10 467 174 N$11 693 633 -10.49

Over the reporting period, a total of 3314 medical claims were processed for which a total amount of N$6 819 317 was paid out to medical and related service providers. In addition, a total 1 632 compensation claims were processed for which an amount of N$3 647 857 was paid out. Total claims received in 2012/13 Financial Year increased marginally with 3.65%. However, the amount paid out for both medical and compensation decreased by 10.49% in comparison to the previous period. The latter decrease is mainly attributed to the lower medical claims processed during this period.

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Satellite branches

As at 28 February 2014, SSC had 11 branch and satellite offices across the country. The number of these branch and satellite offices has continued to increase over the past five years. Subsequent to 28 February 2013, two more offices were open.

6. strAteGY And resource AllocAtIon

6.1 SSC’s strategic objectives and strategies in place or to be implemented to achieve the objectives

6.1.1 Stakeholder Perspective

SSC’s short, medium and long-term strategic objectives (1 March 2012 – 28 February 2013)

Strategic objectivesMeasurement of

Achievements and outcomes for objectives

Strategies in place, or which will be implemented to achieve the objectives

S1: Contribute Towards National Development Objectives

Improve total net additional economic value due to SSC funds management, SSC administration and development activities (Economic Model)

S1.1 Develop model to quantify and track economic value creation

S1.1 Identify and define high impact economic value creation projects that fit into SSC interests

S1.3 Develop & utilise development fund optimally

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S2: Enhance Stakeholder Satisfaction

% Achievement on Key Stakeholder Satisfaction Charter

S2.1 Revision of Current Draft of Stakeholder Charter, Obtain Approval and Implement (translate into SLA’s throughout through performance management)

S2.2 Conduct annual Charter/stakeholder Survey(s) at various levels to determine effectiveness and efficiency

S2.3 Enforce inclusive approach to address deficiencies & improve satisfaction levels

S2.3 Engage Public and relevant Stakeholders according to Stakeholder Engagement Plan;

S2.4 Develop and implement focused Media Coverage Plan and refine in line with stakeholder survey analyses


Strategic objectives

Measurement of Achievements

and outcomes for objectives


S3: Expand Coverage to all Eligible Persons

Close gap between total eligible member population and actual number of registered members (Look at Operations - 10% per annum increase)

S3.1 Develop & implement compliance management function

S3.2 Refine approach to accurately assess and capture total eligible members

S3.3 Develop strategy to get informal economy on board

S3.4 Develop & implement awareness/educational/ marketing approach to facilitate willingness to join SSC


6.1.2 Financial Perspective



Measurement of Achievements and

outcomes for objectives


F1: Grow Revenue of the Funds

To grow total Revenues

F1.1 Develop and Implement a Strategy to Increase Membership

F1.2 Utilise and where necessary refine compliance instruments also at legal/statutory level

To achieve superior Return on Real Investment within Risk parameters

F1.3 Assessment of Performance of Asset Managers and consider refinements

F1.4 Prepare Monthly Reports, monitor and refine financial approaches to investment & funds management






F2: Ensure Financial Sustainability

Funding Levels / Loss Ratio (For both ECF & MSD)

F2.1 Conduct Annual Actuarial Audit and Implement Recommendations

F2.2 Reduce Total Expense within appropriate ratio parameters (to be developed)

F2.3 Implement Development Fund Sustainability Strategy

To improve total revenue/total cost of SSC (ratio)

F2.4 Introduce strategy based budgeting process (ensure cycle alignment of planning & budgeting processes)

F2.5 Develop a tracking device/ratio that reflects ratios of revenue to cost elements and thus constitutes a reflection of financial management effectiveness

F 2.6 Develop & Implement Value addition based motivation of cost centre costs (move towards zero-based budgeting)

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6.1.3 Internal Business Perspective






I1: Improve Business Risk Management

% Improvement on Compliance (Year on Year)

I1.1 Disseminate External Audit Reports and Enforce the Development, Implementation and Progress Reporting of Improvement Plans

I1.2 Develop Risk Identification & Management Framework

I1.3 Integrate Risk Framework in Internal Audit

I1.4 Align audit processes to enable compliance evaluation in rating terms

% of Internal Annual Audit Plan Achieved

I1.5 Develop and Execute Annual Audit Coverage Plan to ensure optimal coverage

I2: Implement Outstanding Funds

% Completion of Implementation of Outstanding Funds

I2.1 Complete Research on Funds and build commitment of all key stakeholders for go-ahead on implementation - project manage to full implementation

I2.2 Define and implement funds (at that stage re-plan responsibilities, project plans and time-lines) - considerable explanatory, lobbying work required to get to this stage

I3: Improve Service, Processing & Delivery Efficiencies

To achieve superior levels of Process Efficiencies in total Value chain (annual improvement from Baseline)

I3.1 Review & reengineer if and where necessary all delivery and service processes

I3.2 Establish baselines and benchmarks and integrate in performance management processes, ensure systematic implementation and institutionalise

I3.3 To fully implement SSC-DF processes in accordance with its defined mandate & policy


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I4: Implement Integrated ERP

% of plan completed to standards

I4.1 Develop IT architecture in line with strategic plans and ERP principles, ensuring highest possible degree of systems integrationI4.2 Plan roll-out and ensure concerted implementation across SSC

I4.3 Determine and implement project plans for implementation

I4.4 Ensure IT/User integrated or partnering approach to ERP development & roll-out

I5: Improve National Reach

Establish viable service points to maximise percentage of members (number of official service points/branches)

I5.1 Determine ideal service points against effectiveness criteria

I5.2 Develop plan of coverage roll-out (align with compliance plans)

I5.3 Implement plans and ensure brand consistent development of service points/offices


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6.1.4 Learning and Growth Perspective






L1: Develop an Empowered High Performance Work Culture

Superior Average Performance Score

L1.1 Review all HR policies & procedures to ensure alignment with HR performance and development aims

L1.2 Develop and implement BSC based performance management and institutionalise

L1.3 Align performance management with remedial planning & implementation processes in T&D

Succession Cover in key positions

L1.4 Develop and implement talent and succession management system

L1.5 Align HR selection & development processes with succession cover targets

% Achievement on Annual Climate Survey (incl. Staff Satisfaction on Key Managerial Criteria)

L1.6 Review criteria and approach to climate survey (integrating new emphasis of mission/vision/values)

L1.7 Institute & monitor remedial OD interventions where required

L1.8 Define managerial style components, translate into staff satisfaction survey and apply, ensuring remedies.

L1.9 Develop and facilitate staff involved remedial approaches to work climate throughout managerial structures


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L2: Grow Functional Competence in All & in Particular Key Jobs

Achieve Functional Competence Benchmark in General Jobs

L2.1 Review jobs and align with Paterson approach

Achieve Functional Competence Benchmark in Key Jobs

L2.2 Define functional competence based job profiles and ensure assessment & gap analysis across organisation

L2.3 Address the gaps in a systematic manner with remedial plans (IDP’s)

L2.4 Accelerate development plans in key positions

L3: Enhance MIS Proficiency & Utilisation amongst all staff

Achieve full MIS Literacy amongst staff in all required systems

L3.1 Align MIS literacy development with systems implementation (include suppliers)

L3.2 Introduce specific MIS competency assessment as part of growing functional competence amongst staff

Eradicate manual MIS towards systems based MIS in all MIS processes identified as critical - cover in ERP (I4)

L3.3 Align IT development with MIS needs across organisation

L3.4 List all critical MIS processes to be computerised and implement as part of roll-out

6.2 Resource allocation plans for strategy implementation

Governance and Investment Policy

The Investments Committee, which is a Board committee, exudes oversight of SSC’s investments as guided by an Investment Policy that sets out the standards and procedures of how SSC funds are to be invested.

The primary investment objective of SSC is to provide liquidity such that benefit payments and operational expenditures are timeously met. This should however not compromise long term growth and capital preservation as infused in the inflation linked benchmark.

SSC makes use of external asset managers with divergent investment styles or philosophies to conservatively manage the larger portion of the investment portfolio with the remainder managed in-house as working capital.

In keeping with national goals, SSC aims to encourage, in as far as possible, the investment in Namibian assets. Although not a pension fund, SSC has taken a position to adhere to regulation 28 which aims at limiting capital flight by stipulating a minimum investment exposure to Namibian assets of 35% of the total investment portfolio.


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Investment Portfolio

The Investment Portfolio closed off the year with N$2.19 billion, a growth (inclusive of contributed capital) of 15.26% from the previous balance of last year of N$1.9 billion.

Fund Allocation

The above graph shows the asset per fund, with the MSD Fund constituting the majority of the funds with 69% of the total portfolio followed by the ECF 19%, SSC-DF 7%, APF 4% and lastly SSC 1%.

The Asset Allocation is depicted in the below graph with cash and cash equivalents having 47% of the total assets in the portfolio followed by bonds at 28% and equity 25%. The tactical asset allocation is as follows: equities (0% - 35%), bonds (0% - 50%) and cash and cash equivalents (25% - 100%). The portfolio is within the tactical asset allocations as per the Investment Policy Standards and Procedures.

Asset Allocation


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SSC surpassed the Regulation 28 minimum local investment requirement of 35% and had more than half of its portfolio invested in Namibian assets (62%) with the remainder of 38% invested in South Africa as depicted in the graph below.

Geographical Allocation

Returns

For the year period ended 28 February 2013, the total portfolio had a return of 10.82%, a 0.35% benchmark outperformance.


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Write-up for the Integrated Report – FY 2013/14

As per the Social Security Act, 1994; an Employer shall submit their contribution payment together with the form - Return Accompanying Payment of Contribution for the Period (“Form 10A”). Social Security Commission has initiated the Electronic Data Interface (“EDI”) project in Financial Year 2010/11, to allow Employer submitting their MSD contribution return, Form 10A, electronically.The EDI allows employer to send electronic Form 10A via email to enable SSC to update the member’s information automatically. Specifically, it allows (1) updating of salary information for contribution calculation and (2) termination of the member under the existing employer. Over the past 12 months, there have been a significant and steady increase on the submission received (see diagram below). Number of submission received from the Employers in Mar 2014 was 389 compares to 187 submission in the same period in 2013. At time of writing, September 2014 had received 491. The growth rate is about 100% annually at moment, this is due to strong commitment from the Commission Management team and executing staffs. Over the past

12~18 months, from technology aspect, Commission has simplified the EDI file generation process; training were conducted to relevant staffs Commission wide; Commission staffs has since then increase in the number of their visit to employers at their regions, to introduce the EDI facilities to employers either in workshops or at employers’ premise. Last but not the least, the executing staffs are on the regular contact with employers to provide on-site training, phone and email support when needed.The EDI facility enable the Employers to submit their MSD contribution return, Form 10A on the monthly basis, electronically and thus reduce the time that Employer having to complete a form manually and a time and cost to drop the form at the SSC offices is also reduced . At same time, it also allows SSC to receive updated information from the Employer on the regular basis for more accurate invoicing; furthermore, it decreases manual data entry work, thus to improve the efficiency for the Commission.All interested Employers are encouraged to contact SSC offices for more information on EDI and how to ease their monthly Form 10A submissions.


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7. CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE During the year, SSC was involved in a number of social responsibility activities to empower the disadvantaged and vulnerable members of the community as per the table below;

Name Background Amount in N$

Unam Northen Campus Science Foundation Program

Bridging course for science students to enroll in the mainstream science course. 40,000

NAMCOL

Support towards the printing of Grade 10 examination booklets for various subjects. 24,000

Tsintsabis Junior Secondary School

Educational tour to the coast since all the children are from the San resettlement camp and had never been outside Tsintsabis. Contribution towards fuel expenses of this tour. 4,000

NAMAS Music Awards Annual Namibian Music Awards to reward excellence in the music industry.

25,000

Women of Substance Association (WOSA)

WOSA aims to inform, inspire and challenge women leaders and girls in Namibia. The funding was towards supporting International Women’s Day commemorations.

15,500

Namibia Women’s Lobby An organization promoting women’s equal participation in decision-making bodies without discrimination, want to construct a soup kitchen.

10,000

Elders A Key To FutureCooperative group of women to help and uplift others in need of basic necessities. 7,000

Khomas Regional Council Contribution towards the hosting of the Katutura Central Expo. 10,000

True Love Waits Namibia Sponsorship towards the hosting of the Annual National Conference. 3,000

Mavuluma Primary School Assistance towards the school teaching aids. 2,000

King Fischer Youth CenterThe centre has a project supporting orphans and vulnerable children and needed donations to purchase school uniforms for the children.

5,000

Ndama Primary School Financial assistance provided to repair broken chairs and desks 5,000

We are the future kindergarten

The school requested donations for chairs, tables and proper teaching material. 5,000


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Hardap Regional CouncilRegional Office hosted a “fun walk” for the elderly and requested for promotional items, such as water bottles and sunscreen lotions.

8,000

Office of the Khomas Governor

The Khomas Governor’s Office had a blanket and mattress project for the citizens who lost their possessions due to fire. 15,000

Opuwo Junior Primary School

School needed financial assistance to develop sports skills in the learners and obtain funds to buy equipment for the school such as computers.

3,000

Ehenye Primary School School requested donations to construct a school hall. 3,000

Opawa Junior Secondary School

The school needed chairs and a school hall hence requesting financial aid. 3,000

Milly’s Kids FirstNon-profit organization that aims to better the lives of disadvantaged children and requested a tent and two pots to cook meals for the children.

5,000

Okondjatu Elders The Okondjatu Elders requested sponsorship for the hosting of a Christmas party for the elderly. 50,000

Total amount spent on social responsibility 242,500


SoCial SeCUritY CoMMiSSion anD aSSoCiateD FUnDS MaternitY leaVe, SiCK leaVe anD DeatH BeneFit FUnD

EMPLOYEES’ COMPENSATION FUND DeVelopMent FUnD

FINANCIAL DISCLOSUREAnneXure A


1. INTRODUCTION

The following have been audited for the year ended 29 February 2013.

1.1 The books of accounts of the Social Security Commission kept in terms of Section 18 of the Social Security Act of 1994, (Act 34 of 1994) and the relevant books, documents and papers audited in terms of Section 19 of the Act.

1.2 The books of accounts for the Employees’ Compensation Fund and Accident Pension Funds kept in terms of Section 22(2) of the Employees’ Compensation Act, 1941 (Act 30 of 1941) and the related books, documents and papers have been audited in terms of Section 22(3) of the Act.

1.3 The books of accounts of the Maternity Leave, Sick Leave and Death Benefits Fund, kept in terms of Section 18 of the Social Security Act of 1994 and the relevant books, documents and papers audited in terms of Section 19 of the Act.

1.4 The books of accounts of the Development Fund, kept in terms of Section 18 of the Social Security Act of 1994 and the relevant books, documents and papers have been audited in terms of Section 19 of the Act.

1.5 This report on the accounts is submitted in terms of Section 27(1) of the State Finance Act, 1991. The firm BDO Namibia of Windhoek has been appointed in terms of Section 26(2) of the State Finance Act (Act 31 of 1991) to audit the accounts on behalf of the Auditor-General and under his supervision. Amounts mentioned in the report have been rounded off to the nearest Namibia Dollar.

2. FINANCIAL STATEMENTS

The audited financial statements are in agreement with the general ledger and other accounting records and are kept in the Office of the Auditor-General. They are the following and are annexed:

2.1 Social Security Commission (“SSC”)

• Statement of Financial Position• Statement of Comprehensive Income• Statement of Changes in Equity• Statement of Cash Flows• Notes to the financial statements

2.2 Employees’ Compensation Fund (“ECF”)


COMMISSIONERS’ REPORT

SOCIAL SECURITY COMMISSION



2.3 Maternity Leave, Sick Leave and Death Benefit Fund (“MSD”)


2.4 Development Fund (“DF”)


3. SCOPE OF THE AUDIT

The Accounting Officer of the Social Security Commission is responsible for the preparation of the financial statements for the Social Security Commission, Employees’ Compensation Fund, the Maternity Leave, Sick Leave and Death Benefit Fund and Development Fund and for ensuring the regularity of the financial transactions. It is the responsibility of the Auditor-General to form an independent opinion, based on the audit, those statements and on the regularity of the financial transactions included in them and to report his opinion to the National Assembly.

The audit as carried out by the contracted firm, included:

(a) examination on a test basis of evidence relevant to the amounts, disclosure and regularity of financial transactions included in the financial statements;

(b) assessment of the significant estimates and judgements made by the Accounting Officer of the Commission in the preparation of the financial statements and of whether the accounting policies are appropriate to the Funds’ circumstances, consistently applied and adequately disclosed; and

(c) evaluation of the overall adequacy of the presentation of information in the financial statements.

The audit was planned and performed so as to obtain all the information and explanations considered necessaryto provide sufficient evidence to give reasonable assurance that:

(i) the financial statements are free from material misstatement, whether caused by error, fraud or other irregularity;

(iii) in all material respects, the expenditure and income have been applied to the purposes intended by the legislature; and

(iv) the financial transactions conform to the authorities that govern them.



4. AUDIT OBSERVATIONS

Issues identified during the audit are annexed in the following format:

• Category• Observation• Implication• Recommendation• Management comment

5. QUALIFIED AUDIT OPINION – SOCIAL SECURITY COMMISSION

The accounts of the Commission for the financial year ended 28 February 2013 were audited by me in terms of the provisions of Section 19 of the Act, read with section 25(1)(b) of the State Finance Act, 1991.

Basis for Qualified Audit Opinion

Owing to the nature of the commission’s records, I am unable to obtain sufficient appropriate audit evidence to satisfy myself as to the accuracy and valuation of the Value Added Tax receivable.

Except for the matters mentioned in the preceding paragraph, I hereby certify that, in my opinion, the financial statements published, fairly present the financial position of the Fund and the results of the operations and cash flow information for the year ended 28 February 2013 in accordance with the International Financial Reporting Standards.

6. QUALIFIED AUDIT OPINION – MATERNITY LEAVE, SICK LEAVE AND DEATH BENEFIT FUND

The accounts of the Fund for the financial year ended 28 February 2013 were audited by me in terms of the provisions of Section 19 of the Act, read with Section 25(1) (b) of the State Finance Act, 1991.

Basis for Qualified Opinion

Owing to the nature of the commission’s records, I am unable to obtain sufficient appropriate audit evidence to satisfy myself as to the completeness, existence, valuation and accuracy of the contribution revenue, accounts receivables, provisions for benefits payables and benefits expenses.

Except for matters mentioned in the preceding paragraphs, I hereby certify that, in my opinion, the financial statements published, fairly present the financial position of the Fund and the results of the operations and cash flow information for the year ended 28 February 2013 in accordance with the International Financial Reporting Standards.

report oF tHe aUDitor-General


7. QUALIFIED AUDIT OPINION – EMPLOYEES’ COMPENSATION FUND

The accounts of the Fund for the financial year ended 28 February 2013 were audited by me in terms of the provisions of Section 22 (3) of the Employees’ Compensation Act, 1941, read with Section 25(1) (b) of the State Finance Act, 1991.

Basis for Qualified Audit Opinion

Owing to the nature of the commission’s records, I am unable to obtain sufficient appropriate audit evidence to satisfy myself as to the completeness, existence, valuation and accuracy of the assessment revenue, accounts receivables, provisions for benefits payables and benefits expenses.

Except for matters mentioned in the preceding paragraph, I hereby certify that, in my opinion, the financial statements published, fairly present the financial position of the Fund and the results of the operations and cash flow information for the year ended 28 February 2013 in accordance with the International Financial Reporting Standards.

8. AUDIT OPINION – DEVELOPMENT FUND

The accounts of the Fund for the financial year ended 28 February 2013 were audited by me in terms of the provisions of Section 19 of the Act, read with Section 25(1) (b) of the State Finance Act, 1991.

I hereby certify that, in my opinion, the financial statements published, fairly present the financial position of the Fund and the results of the operations and cash flow information for the year ended 28 February 2013 in accordance with the International Financial Reporting Standards.

WINDHOEK, March 2014 JUNIAS ETUNA KANDJEKE AUDITOR-GENERAL



TO THE HONOURABLE SPEAKER OF THE NATIONAL ASSEMBLY

I have the honour to submit herewith my report on the accounts of the Social Security Commission, Employees’ Compensation Fund and Maternity Leave, Sick Leave and Death Benefit Fund for the financial year ended 28 February 2013, in terms of Article 127(2) of the Namibian Constitution. My report is transmitted to the Commission in terms of Section 19(1) of the Social Security Act, (Act 34 of 1994) to be submitted to the Honourable Minister of Labour in terms of Section 19(2) who shall lay the report upon the Table of the National Assembly in terms of Section 19(3) of the Act.

WINDHOEK, March 2014 JUNIAS ETUNA KANDJEKE AUDITOR-GENERAL




annUal FinanCial StateMentS

FOR THE YEAR ENDED 28 FEBRUARY 2013


SOCIAL SECURITY COMMISSION AND ASSOCIATED FUNDS

Commissioner’s Responsibilities and Approval

The Commissioners are required in terms of the Social Security Act of 1994 to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the commission as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The Auditor-General is engaged to express an independent opinion on the annual financial statements.

The annual financial statements for the year ended 28 February 2013 are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The Commissioners acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the Commissioners to meet these responsibilities, the board sets 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 commission and all employees are required to maintain the highest ethical standards in ensuring the commission’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the commission is on identifying, assessing, managing and monitoring all known forms of risk across the commission. While operating risk cannot be fully eliminated, the commission endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Commissioners are of the opinion, based on the information and explanations given by management, 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 control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The Commissioners have reviewed the commission’s cash flow forecast for the year to 28 February 2014 and, in the light of this review and the current financial position, they are satisfied that the commission has or has access to adequate resources to continue in operational existence for the foreseeable future.

The Auditor-General is responsible for independently reviewing and reporting on the commission’s annual financial statements. The annual financial statements have been examined by the Auditor-General and their report is presented on pages 4 to 5.The annual financial statements set out on pages 6 to 31, which have been prepared on the going concern basis, were approved by the board on 17 September 2013 and were signed on its behalf by:

Commissioner CommissionerWindhoek17 September

annUal FinanCial StateMentSfor the year ended 28 FEBRUARY 2013


GENERAL INFORMATION & INDEX

Country of incorporation and domicile Namibia

Nature of business and principal activities

The Social Security Commission’s principal activity is to contribute to the social and economic development of Namibia. The Commission performs the administrative tasks of the Maternity, Sick and Death Benefit Fund, the Employers Compensation Fund and the Development Fund. The Commission was established under the Social Security Act 34 of 1994.


Mr B R R Kukuri(Chairperson)Mr A E BiwaMs A E Zamuee Ms C U Pandeni Mr D WrightMs E Breuer Ms H Kapenda Mr H Shikongo Mr J T GaroebMs O M L M Kutenda

Auditors Office of the Auditor-General

Registered office Cnr. A. Kloopers & Haupt StreetsKhomasdalWindhoekNamibia

Business address Cnr. A. Kloopers & Haupt StreetsKhomasdalWindhoekNamibia

Postal address Private Bag 13223WindhoekNamibia

Bankers Bank Windhoek

Secretary Emma Kantema Gaomas

CONTENTSPage

Commisioners’ Report 56 - 57Statement of Financial Position 58Statement of Comprehensive Income 59Statement of Changes in Equity 60Statement of Cash Flows 61Notes to the Annual Financial Statements 62- 76




Commissioners’ Report

The Commissioner’s submitted their report for the year ended 28 February 2013.

1. Incorporation

The Commission was incorporated through an Act of Parliament, the Social Security Act of 1994.

2. Review of activities Main business and operations

The Social Security Commission’s principal activity is to contribute to the social and economic development ofNamibia. The Commission performs the administrative tasks of the maternity, sick and death benefit fund, the employers compensation fund and the development fund. The Commission was established under the Social Security Act 34 of 1994 and operates in Namibia.

The operating results and state of affairs of the Commission are fully set out in the attached annual financial statements and do not in our opinion require any further comment.Net surplus of the Commission was N$ 1 779 000 (2012: N$ 1 114 000).

3. Events after the reporting period

The Commissioners are not aware of any matter or circumstance arising since the end of the financial year.

4. Commissioners’ interests in contracts

The Commissioners did not have any interests in the contracts entered into by the commission during the year.

5. Commissioners

The Commissioners of the commission during the year and to the date of this report are as follows:

Name

Mr B R R Kukuri (Chairman) Mr A E BiwaMs A Zamuee Ms C U Pandeni Mr D WrightMs E Breuer Ms H Kapenda Mr H ShikongoMr J T //GaroebMs O M L M Kutenda

annUal FinanCial StateMentSfor the year ended 28 FEBRUARY 2013COMMISSIONERS’ REPORT


6. Secretary

The secretary of the Commision is Emma Kantema Gaomas:

Business address

Cnr. A. Kloppers & J . Haupt Streets KhomasdalWindhoekNamibia

Postal address

Private Bag 13223WindhoekNamibia

7. Auditors

Office of the Auditor-General will continue in office in accordance with the Social Security Act of 1994.





Notes 2013 2012

N$ ‘000 N$ ‘000

Assets

Non-Current Assets

Loans to related funds 3 4 138 3 033

Current AssetsLoans to related funds 3 6 837 6 875Investments 4 16 213 17 300Trade and other receivables 5 570 229Cash and cash equivalents 6 2 984 1 745

26 604 26 149

Total Assets 30 742 29 182

Funds and LiabilitiesFundsAccumulated surpluses 24 930 23 151LiabilitiesCurrent LiabilitiesLoans from related funds 3 5 399 5 516Trade and other payables 7 413 515

5 812 6 031

Total Funds and Liabilities 30 742 29 182

STATEMENT OF FINANCIAL POSITION



Notes 2013 2012N$ ‘000 N$ ‘000

Other income 377 117Operating expenses (246) (197)

Surplus before investment income 8 131 (80)Investment income 9 1 648 1 194

Surplus for the year 1 779 1 114

Total comprehensive income 1 779 1 114

STATEMENT OF COMPREHENSIVE INCOME



Accumulated surpluses

Total equity

N$ ‘000 N$ ‘000

Balance at 01 March 2011 22 037 22 037Changes in accumulated surplusesTotal comprehensive income for the year 1 114 1 114Total changes 1 114 1 114

Balance at 01 March 2012 23 151 23 151

Changes in accumulated surpluses

Total comprehensive income for the year 1 779 1 779Total changes 1 779 1 779

Balance at 28 February 2013 24 930 24 930


STATEMENT OF CHANGES IN EQUITY


Notes 2013 2012

N$ ‘000 N$ ‘000

Cash flows from operating activities

Cash used in operations 10 (312) (2 121)

Interest income 1 648 1 194

Net cash from operating activities 1 336 (927)

Cash flows from investing activities

Repayment of loans from associated funds (1 184) (1 758)

Sale / (Purchase) of financial assets 1 087 (17 300)

Net cash from investing activities (97) (19 058)

Total cash movement for the year 1 239 (19 985)

Cash at the beginning of the year 1 745 21 730

Total cash at end of the year 6 2 984 1 745


STATEMENT OF CASH FLOWS




1. Accounting Policies

1.1 Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Social Security Act of 1994. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Namibia Dollars.

These accounting policies are consistent with the previous period.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the 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 annual financial statements. Significant judgements include:

Trade receivables, Held to maturity investments and Loans and receivables

The Commission assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the Commission makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio

and scaled to the estimated loss emergence period.

Impairment testing

The Commission reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable.

Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note - Provisions. 1.3 Financial instruments Classification

The Commission classifies financial assets and financial liabilities into the following categories:

• Held-to-maturity investment • Loans and receivables• Financial liabilities measured at amortised cost

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition. Classification is re-assessed on an annual basis, except for financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

1.3 Financial instruments

Financial instruments are recognised initially when the Commission becomes a party to the contractual provisions of the instruments.

The Commission classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are

NOTES TO THE ANNUAL FINANCIAL STATEMENTS



1.3 Financial instruments (Continued)

classified as available-for-sale financial assets.For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss.

Subsequent measurement

Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Held-to-maturity investments are subsequently mea-sured at amortised cost, using the effective interest method, less accumulated impairment losses.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Commission has transferred substantially all risks and rewards of ownership.

Impairment of financial assets

At each reporting date the Commission assesses all financial assets to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired. For amounts due to the Commission, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment. Impairment losses are recognised in profit or loss.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss within operating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

Loans to (from) associated funds

These include loans to and from associated funds and these are recognised initially at fair value plus direct transaction costs. Loans to associated funds are classified as loans and receivables. Loans from associated funds are classified as financial liabilities measured at amortised cost.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method.

Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired.

The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables.

Subsequent recoveries of amounts previously written off are credited against operating expenses in profit or loss.

Trade and other receivables are classified as loans and receivables.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.Cash and cash equivalents






Trade and other payables (Continued)

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

Employee benefits Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

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 expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Defined benefit plans

For defined benefit plans the cost of providing the benefits is determined using the projected unit credit method.

Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.Consideration is given to any event that could impact the funds up to the end of the reporting period where the interim valuation is performed at an earlier date.

Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight line basis over the average period until the amended benefits become vested.

1.4 Employee benefits

To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in profit or loss over the expected average remaining service lives of participating employees. Actuarial gains or losses within the corridor are not recognised.Actuarial gains and losses are recognised in the year in which they arise, in other comprehensive income.

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the Commission is demonstrably committed to curtailment or settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In profit or loss, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a reimbursement.

The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduces by the fair value of plan assets.

Any asset is limited to unrecognised actuarial losses and past service costs, plus the present value of available refunds and reduction in future contributions to the plan.

1.5 Provisions and contingencies

Provisions are recognised when:

• the Commission has a present obligation as a result of a past event;



1.5 Provisions and contingencies (Continued)

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision. Provisions are not recognised for future operating losses. If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 16.

1.6 Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.

Investment income

Interest is recognised, in profit or loss, using the effective interest rate method.

Dividends are recognised, in profit or loss, when the Commission’s right to receive payment has been established.

2. New Standards and Interpretations

2.1 Standards and interpretations effective and adopted in the current year

In the current year, the Commission has adopted

the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

Amendment to IFRS 7 Financial Instruments: Transfer of financial assets

Amended the required disclosures to help users of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position.The effective date of the amendment is for years beginning on or after July 01, 2011.The Commission has adopted the amendment for the first time in the 2013 annual financial statements.

2.2 Standards and Interpretations early adopted

The Commission has not early adopted any standards and interpretations:

2.3 Standards and interpretations not yet effective

The Commission has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Commission’s accounting periods beginning on or after 01 March 2013 or later periods:

IFRS 9 Financial Instruments

The Standard provides guidance on classification, measurement and derecognition of financial assets and liabilities. The main changes from IAS 39 are:• Financial assets will be categorised as those

subsequently measured at fair value or at amortised cost.

• Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All investments are to be subsequently measured at fair value.

• Investments in equity instruments may be measured.





FRS 9 Financial Instruments (Continued)

at fair value through other comprehensive income.

The effective date of the standard is for years beginning on or after 01 January 2013.

The Commission expects to adopt the standard for the first time in the 2014 annual financial statements.

It is unlikely that the standard will have a material impact on the Commission’s annual financial statements.

IFRS 13 Fair Value Measurement

The standard provides guidance on the measurement and disclosure of items measured at fair value or required to be disclosed at fair value in terms of other IFRS’s.

The effective date of the standard is for years beginning on or after 01 January 2013.The Commission expects to adopt the standard for the first time in the 2014 annual financial statements. It is unlikely that the standard will have a material impact on the Commission’s annual financial statements

IAS 19 Employee Benefits Revised

Require recognition of changes in the net defined ben-efit liability / (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements.

Introduce enhanced disclosures about defined benefit plans.Modify accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits.Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features.

The effective date of the amendment is for years beginning on or after January 01, 2013.

The Commission expects to adopt the amendment for the first time in the 2014 annual financial statements. The impact of the on the Commission’s annual financial statements has not yet been assessed.

IAS 32 Amendment to IAS 32 Financial Instruments: Presentation

- Offsetting financial assets and financial liabilities.- The amendment has clarified and expanded the application guidance in relation to the offsetting of financial assets and financial liabilities in respect of:• The meaning of ‘currently has a legally enforceable

right of set-off’;• The application of simultaneous realisation and

settlement;• The offsetting of collateral amounts;• The unit of account for applying the offsetting

requirements;

The Commission has not yet established the impact of the adoption of the amendment.




2013 2012N$ ‘000 N$ ‘000

3. Loans to / (from) related fundsRelated fundsMaternity Leave, Sick Leave and Death Benefit Fund 3 561 3 583Maternity Leave, Sick Leave and Death Benefit Fund (3 015) (3 130)Employees’ Compensation Fund (2 384) (2 386)Development Fund 503 503Accident Pension Fund 71 -Employees’ Compensation Fund 2 702 2 789National Medical Benefit Fund 1 479 975National Pension Fund 2 659 2 058

5 576 4 392

The loans due from National Pension Fund and National Medical Benefit Fund are repayable upon formation of these funds. There are no repayment terms, but repayment is not expected within the next twelve months. The loans are unsecured and bear no interest.

The other related funds balances are unsecured, interest free and have no fixed repayment terms.

Non-current assets 4 138 3 033Current assets 6 837 6 875Current liabilities (5 399) (5 516)

5 576 4 392

4. Investments

At fair value through profit or loss - designatedFund held with professional asset managers

Funds held with professional asset managers are fair valued by professional managers at year end.

14 794 -

Held to maturityFixed term deposits

Fixed term deposits are held with financial institutions. The average investment period is 1 to 3 months from the statement of financial position date and the interest rates are between 4% and 6% per annum.

1 419 17 300

Total other financial assets 16 213 17 300

Current assets

At fair value through profit or loss 14 794 -Held to maturity 1 419 17 300

16 213 17 300





4. Investments (Continue)

Fair value information

Financial assets at fair value through profit or loss are recognised at fair value, which is therefore equal to their carrying amounts.

Fair value hierarchy of financial assets at fair value through profit or loss

For financial assets recognised at fair value, disclosure is required of a fair value hiera-rchy which reflects the significance of the inputs used to make the measurements.

Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets.


As at 28 February 2013, the receivables with carrying amount of N$ 245 000 (2012: N$ 245 000) were impaired and fully provided for.

6. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 6 4Bank balances 2 978 1 741

2 984 1 745

7. Trade and other payables

Accruals 351 453

Deposits received 62 62 413 515

8. Surplus before investment income

Surplus before investment income for the year is stated after accounting for the following:

Employee costs (5) -

2013 2012

N$ ‘000 N$ ‘000

Level 1

Financial assets held at fair value through profit and loss 14 794 -

5. Trade and other receivables

Trade receivables 305 353

Value Added Tax 510 121Impairment of trade receivables (245) (245)

570 229



2013 2012

N$ ‘000 N$ ‘000

9. Investment income

Interest income

Fixed term investments 1 648 1 194

10. Cash used in operations

Profit before taxation 1 779 1 114Adjustments for:Investment income (1 648) (1 194)Changes in working capital:Trade and other receivables (341) (3 369)Trade and other payables (102) 1 328

(312) (2 121)

11. Auditors’ remuneration

Fees 19 -

12. Retirement benefits

Defined benefit fund

The staff members are members of Government Institutions Pension Fund (GIPF), a defined benefit fund. The sponsors of the fund are various government related institutions that include the fund and these sponsors have an obligation to meet the shortfall if the fund’s liabilities were to exceed the fund’s assets.

There is not sufficient information available to enable the fund to account for the plan as a defined benefit plan due to the fact that the proportionate share applicable to the fund is not clearly identified. The plan is therefore accounted as if it is a defined contribution plan.

The value of the assets of GIPF is valued by actuaries every third year. The latest valuation was done at at 31 March 2009, and the valuator reported that the fund

was in good financial position, and that the present rates of contributions were adequate to enable the fund to provide benefits to which members are entitled. With reported actuarial value of liabilities and reserves of N$ 28.28 billion and assets of N$ 29.941 billion, the funding level at valuation date was 105.9%.

The method used to place value on the past services liabilities and the required future contribution rate is known as the project unit credit method based on actuarial valuations.

Based on the data disclosed by the actuarial valuation, the surplus is within acceptable range to prevent a short-fall within the foreseeable future and therefore places no current obligation on the fund to provide for.The performance of the fund’s investments is benchmarked on a quarterly basis by its investment consultant, Human Employee Benefits Commission (Pty) Ltd.





13. Related parties

Relationships

Administered funds:

Maternity Leave, Sick Leave and Death Benefit Fund Development FundEmployees Compensation Fund National Pension Fund National Medical Benefit Fund Accident Pension Fund

Commissioners:

Mr. B R R Kukuri (Chairperson) MR. A E BiwaMs. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H ShikongoMr. J T //Garoeb Ms. O M L M Kutenda

Related party balances

2013 2012N$ ‘000 N$ ‘000

Loan accounts - Owing (to) / by related partiesMaternity Leave, Sick Leave, and Death Benefit Fund (3 015) (3 130)Employees’ Compensation Fund (2 384) (2 386)Maternity Leave, Sick Leave, and Death Benefit Fund 3 561 3 583Employees’ Compensation Fund 2 702 2 789Development Fund 503 503National Pension Fund 2 659 2 058National Medical Benefit Fund 1 479 975Accident Pension Fund 71 -




14. Financial risk management objectives and

policies

Financial risk management

The primary objective of the investment of the Commission is to balance the safety needs, liquidity and return objectives of the Fund against the liability structure and the general objectives of each fund.

The investment portfolio shall be diversified to minimise the risk of loss resulting from concentration of assets in a specific maturity, specific issuer or a specific class of securities. Further diversification will be provided by employing more than one asset manager with relatively low correlation in their investment performance based on investment styles.

The Commissioners recognise that investment management is a long term process and there will be fluctuations in the short-term. However, the long-term objective will only be met if they are consistently achieved over a shorter period.

Real returns (i.e returns in excess of inflation) are required across the range of portfolios, which

compensate adequately for the levels of risk inherent in the portfolio. The requirement for real returns shall not apply to the working capital portfolio.

Preservation of capital in real terms and absolute terms is an important consideration for the Commission in the longer term.

Liquidity risk management

Liquidity risk is the risk that the Commission will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk arises when there is mismatching between the maturity of liabilities and assets.

The Commission is exposed to daily calls on its available cash resources from claims. Liquidity is the risk that cash may not be available to pay obligations when due at a reasonable cost. The board sets limits on the minimum proportion of maturity funds available to meet such calls.

The Commission actively manages its cash resources, split between short-term and long-term to ensure sufficient cash is at hand to settle claims liabilities, based on monthly float projections. The Commission has significant liquid resources to cover its obligations.





14. Financial risk management objectives and policies (continued)

Cash flow interest rate risk

2013 Current interest rate

Due in less than a year

Due after one year

Trade and other receivables - % 570 -

Loans to related funds - % 1 438 4 138

Cash and cash equivalents 4.25% 3 114 -

Fixed term investments 4.25% 1 479 - Funds held at fair value through profit and loss - % 14 794 -

Trade and other payables - % (413) -



Due after one year

Trade and other receivables - % 229 -

Loans to related funds - % 1 359 3 033

Cash and cash equivalents - % 1 745 -

Short-term deposits 5.34% 18 229 -

Trade and other payables - % (515) -

Interest rate risk management

Interest rate risk arises primarily from the Commission investments in fixed income securities, which are exposed to fluctuations in interest rates. Exposure to interest rate risk is monitored through several measures that include monitoring of returns and switching investments to take advantage of high returns in certain instruments.

An increase or decrease of 1% in the respective interest rates would result in the following changes in the amortised costs of these financial instruments.

Interest rate sensitivity The following table demonstrates the sensitivity to a reasonably possible change in interest rate on cash and cash equivalents affected. The impact is as follows:

Effect on surplus for the year 2013 2012

Increase / (decrease) of 1% in interest rates 14 173

Credit risk is the risk of loss in the value of financial assets due to counterparties failing to meet all or part of their obligations.

Key areas where the fund is exposed to credit risk are: - accounts receivables - investments and cash equivalents





policies

Credit risk management trade and other receivables

The Commission’s maximum exposure to credit risk at the reporting date is the carrying value of financial assets disclosed in note 5. The fund does not hold any collateral as security. Receivables are presented net of the provision for impairment losses.

Investments and cash and cash equivalents

The Commission’s cash and cash equivalents and investments are placed with high credit quality financial institutions. The Commission has a policy of limiting

the amount of credit exposure to any one financial institution. The maximum exposure at the reporting date is the carrying value of cash and cash equivalents disclosed in note 6 and the carrying value of investments in note 4. The Commission deposits only with reputable financial institutions and the credit quality of financial assets are therefore good.

Financial Instruments

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instruments are disclosed in note 1 to the financial statements. Refer to note 1 for additional details.

At 28 February 2013Loans

and other receivables

Financial liabilities

amortised at cost

Loans to related funds 5 576 -Trade and other receivables 570 -Fixed term investments 1 419 -Funds held through profit and loss 14 794 -Cash and cash equivalents 2 984 -Trade and other payables - (413)




amortised at cost

Loans to related funds 4 392 -Trade and other receivables 229 -Investments 17 300 -Cash and cash equivalents 1 745 -Trade and other payables - (515)






policies (continued)

Market risk

Market risk is the risk of adverse financial impact due to changes in fair values orfuture cash flows of financial instruments from fluctuations in the interest rate and equity prices. Financial assets are disclosed in the following classes based on their similar characteristics:

Loans and receivablesHeld for trading at fair value through profit and loss Held to maturity

Market risk arises in the Commission due to fluctuations in both the value of liabilities and value of investments held.

Management has established a policy on market risk which sets out principles that the Commission is expected to adopt in respect of management of the key market risks to which the Commission is exposed. The board monitors adherence to this market risk policy and regularly reviews how management is managing these risks through the investment committee and audit and risk committee. For each of the major components of market risk, described in risk management note, the management has put in place additional policies and procedures to set out how risk should be managed and monitored, and the approach to setting an appropriate risk appetite.

Price risk

The Commission is subject to price risk due to the daily changes in the market values of its investments held by asset managers. The Commission’s objective is to earn competitive relative returns by investing in a diverse portfolio of high quality, liquid securities. Portfolio characteristics are analysed regularly and equity price risk is actively

managed through a variety of modeling methods by asset managers. The fund’s holdings are diversified across industries, and concentration in any one fund or industry is limited by parameters established by asset managers and statutory requirements. The fund’s exposure to movement in equities is 32% for domestic equities on the funds held by asset managers.

Equity price sensitivity analyses

At 28 February 2013, the Commission’s listed equities were recorded at their fair value of N$ 14.8 million (2012: N$ nil). A hypothetical 10% decline or increase in each individual share price would decrease/increase the surplus for the year by N$ 1.48 million (2012: N$ nil).


There are no events which occurred after the year end which warrant disclosure.

16. Contingencies

1. This matter in May 2007 a claimant’s leg was amputated. In 2008 he submitted a claim for compensation under the Employees Compensation Act claiming that an injury that he sustained at work on resulted in the amputation of his leg. The Commission paid for the claimant’s prosthesis in the amount of N$ 88 100. Mr. Dumeni then demanded that the Commission provide him with a monthly pension since he is now disabled.

Upon further investigation it was found that the claimant’s initial claim was brought outside the period of six months as required by the Employees Compensation Act. The claimant was further subjected to a medical examination in terms of Section 60 of the Employees Compensation Act to determine if the amputation of his leg was as a result of the injury that he allegedly sustained at work on 18 July 1996. The medical report from the doctor revealed that the 1996 injury could not have resulted in the amputation of his leg. The medical report further provided that the amputation was as a result of a pre-existing condition.




16. Contingencies (Continued)

The formal hearing in terms of section 56 of the Employees Compensation Act was conducted on 15 October 2012 and 30 November 2012. The chairperson rendered his advice in the form of recommendations to the fund for its final decision. The recommendations are to the effect that the 1996 injury did not cause the amputation of the claimant’s leg. The Commission is thus entitled to claim the compensation paid to him. However, the recovery of the compensation paid is not recommended.

2. Litigation is in the process against the fund relating to a labour matter on unfair dismissal. In this Labour matter, SSC appealed the DLC’s judgment. The matter was set down for 23 November 2011 to 2 December 2011. This matter which was set down for hearing on 20 October 2012, will be postponed because Mr. Mulder does not have a legal representative. Our instructions are that this be a final postponement for Mr. Mulder and that he bears the costs occasioned by this postponement. The Fund’s Legal Representative was also requested to provide the Commission with a report on the prospects of success in this matter considering the cost expended on this matter to date.

The Court ordered SSC to reinstate and compensate complainant for his loss of income from 20 May 2005 until his date of reinstatement minus the income he received while in the employ of Trustco Group Holdings.

3. A letter was written to GIPF requesting the GIPF to withdraw Mr. Spanneberg’s pension benefits of N$ 440 471 in favour of the Commission as compensation in terms of section 37 D (b)(ii)(aa). GIPF advised that the benefits cannot be withdrawn in favour of the SSC. Mr. Marcus was instructed to issue summons in this matter.

4. A legal opinion was obtained in this regard. The further investigations conducted did not yield any positive results as to the filing of an unfair dismissal case that was lodged against the Minister of Labour. Mrs. Onesmus was recently charged due to an investigation by the Anti-Corruption Commission in relation to the misadministration charges that were previously leveled against her through a civil suit which was later settled.

In September 2012, Mrs. Onesmus telephonically requested the Commission to complete her pension withdrawal form and was advised that the Commission has no intention of complying with her request. Instead the Commission is considering bringing an application in terms of section 300 (1) of the Criminal Procedure Act 51 of 1977 during her criminal trial. She promised to make a written request to the Commission and was advised that the Commission will then advise her based on her written request.

5. A follow up letter was written to Dr. Weder, Kauta and Kamuhanga Legal Practitioners regarding the Avid case to determine the status of the N$ 3.5 million held in trust by the Trustee of Mr. Josea the purpose thereof, amongst other issues. A progress report from Dr. Weder, Kauta and Hoveka Legal Practitioners was received and submitted to the Audit and Risk Committee for noting during 22 October 2012 meeting. At the meeting held on 22 November 2012 to discuss the status of the N$ 3.5 million, SSC was informed that the N$ 3.5 million was paid to Mr. Josea. As per the Attorney General’s advise, the SSC’s last available option is to wait for the criminal proceedings to commence, and to request the Prosecutor General’s Office to impose a suspensive condition during sentencing to ensure that the SSC is compensated in the amount owed to the SSC. Only after having exhausted these options should the line Ministry request Treasury to write off the debt or the balance thereof. The matter is set down for 14 February 2014.

6. The High Court referred this matter for a hearing in terms of section 56 of the ECA. However, SSC appealed the High Court’s judgment to the Supreme Court. The matter was heard in July 2011 and judgment was reserved. This matter will provide guidance as to how SSC can deal with cases that are brought outside the prescription period (section 54 cases). The fund is still awaiting judgment in this matter.

7. A legal case against Cheetah Security for failure to register employees with the SSC. The defendant pleaded guilty and was fined by the Magistrates’ Court.

8. A case involving an employee who defrauded the Commission an amount of N$ 54 431 and was





16. Contingencies (Continued)

charged for fraud as a result. The fund contacted the prosecutor and was advised that the trial of this matter will be heard de novo (a fresh) because there are parts of the record that are missing.

9. There is a petrol card fraud case of N$ 7 154 under investigation in Walvis Bay. Employees of the Commission are implicated. Further details will be provided as the case progresses.

10. The Namibian police are investigating an alleged death claim fraud case, where the deceased was married to two women and one of the wives claimed his death benefits of N$ 5 000 from SSC. The first death certificate submitted with the claim indicated that the deceased was single. A subsequent one revealed that the deceased was in fact married. Legal is assisting the investigation officer with the claim documents as fund would be interested to know whether there is any involvement from within SSC.

11. The Fund sued and obtained judgment against Schnugh for defrauding the Commission in the amount of N$ 196 073 in respect of vehicles that were sold at an auction between February and June 2007. Schnugh did not pay the proceeds of the sale of the vehicles to the Commission. Schnugh was ordered to pay N$ 5 000 per month to the Commission. After the letter was written to Hengari, Kangueehi & Kavendji Incorporated, they reported that Schnugh cannot be traced. Hengari et al

were advised to provide the latest contact details of the client and lost payments received. A tracing agent was appointed to trace Schnugh.

Thus far the investigation by the tracing agent revealed that Mr. Schnugh is married out of community of property. The agent ascertained that Mr. Schnugh does not own the house in which he is currently living. He is in fact renting the said property. Mr. Schnugh however promised to pay an amount of N$ 1 000 directly into the Bank account of the SSC by the end of November 2012. No payment has been received to date. Mr. Schnugh promised to make a payment end of January 2013. On 23 January 2013. Mr. Schnugh was advised that SSC is considering handing the matter back to its lawyers for debt collection purposes. It should however be noted that the risk is that the judgment debtor may still not be in a position to repay the debt, which may result in SSC incurring extra legal costs in pursuit of collecting the outstanding debt.

12. The fund bought erf 1610 from the Municipality of Keetmanshoop on 28 March 2001 for N$ 24 000. The erf was paid for on 28 March 2001 but there was no transfer into the fund’s name. During April 2012, the Fund brought an application to the High Court to order the Municipality to transfer erf 1610 into the its name. The Fund is advised that the Municipality has signed the agreement. The fund accepted a settlement of just over N$ 20 000 as wasted costs for the abovementioned application. The property was registered into the name of the SSC.



MaternitY leaVe, SiCK leaVe anD DeatH BeneFit FUnD

FOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2013





The Maternity, Sick and Death Benefit Fund’s principal activity is to provide a short-term social insurance scheme for all persons who work and receive a basic wage in Namibia. The Fund was established under the Social Security Act 34 of 1994.




Registered office Cnr. A. Kloopers & Haupt Streets

KhomasdalWindhoekNamibia



Bankers Bank WindhoekSecretary Emma Kantema-Gaomas

CONTENTSCommissioners’ Report 79 - 80Statement of Financial Position 81Statement of Comprehensive Income 82Statement of Changes in Equity 83Statement of Cash Flows 84Notes to the Annual Financial Statements 85 - 114

MaternitY leaVe, SiCK leaVe anD DeatH BeneFit FUnDAnnual Financial Statements for the year ended 28 FEBRUARY 2013



Commissioners’ Report

The commissioners submit their report for the year ended 28 February 2013.


The maternity, sick and death benefit fund’s principal activity is to provide a short-term social insurance schem for all persons who work and receive a basic wage in Namibia. The fund was established under theSocial Security Act 34 of 1994 and operates in Namibia.

The operating results and state of affairs of the fund are fully set out in the attached annual financial statements and do not in our opinion require any further comment.

Net surplus of the organisation was N$ 118 851 000 (2012: N$ 148 373 000).


The commissioners are not aware of any matter or circumstance arising since the end of the financial year.

3. Commissioners’ interest in contracts

The commissioners did not have any interests in the contracts entered into by the fund during the year.

4. Non-current assets

There were additions to Property, plant and equipment amounting to N$ 6 404 000 (2012: N$ 6 253 000) during the year under review, and disposals with a carrying amount of N$ 124 000 (2012: N$ 412 000) were made.

There were additions to Intangibles amounting to N$ 1 558 000 (2012: N$ 597 000) during the year under review.

5. Transfer to Development Fund

The distributions already declared and paid to Development Fund during the year are as reflected in the attached statement of changes in equity, and the appropriate approval was granted by the commissioners.

6. Commissioners

The commissioners of the fund during the year and to the date of this report are as follows:

Name

Mr. B R R Kukuri (Chairperson) Mr. A E Biwa Ms. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H Shikongo Mr. JT //Garoeb Ms. O M L M Kutenda




7. Secretary

The secretary of the Commission is Emma Kantema-Gaomas:

Business address Cnr. A. Kloopers & Haupt StreetsKhomasdalWindhoek

Postal address Private Bag 13223Windhoek

Namibia

8. Auditors

Office of the Auditor-General will continue in office in accordance with section 19 of the Social Security Act of 1994.





Notes 2013 2012

N$ ‘000 N$ ‘000

AssetsNon-Current AssetsInvestment property 3 5 961 3 575Property, plant and equipment 4 35 781 33 244Intangible assets 5 1 735 779

43 477 37 598

Current AssetsLoans to related funds 6 3 064 3 408Investments 7 1 514 346 1 399 888Trade and other receivables 8 12 900 7 738Cash and cash equivalents 9 11 583 4 278

1 541 893 1 415 312

Total Assets 1 585 370 1 452 910

Funds and Liabilities

FundsAccumulated funds 1 487 923 1 356 442

Liabilities

Non-Current LiabilitiesProvisions 10 943 1 444

Current LiabilitiesLoans from related funds 6 6 161 6 219Trade and other payables 11 28 472 17 838Provisions 10 61 871 70 967

96 504 95 024

Total Liabilities 97 447 96 468

Total Funds and Liabilities 1 585 370 1 452 910


Notes 2013 2012

N$ ‘000 N$ ‘000

Revenue 12 280 127 254 681

Claims 13 (148 054) (138 446)

Gross surplus 132 073 116 235

Other income 14 1 642 1 446Operating expenses (135 999) (105 760)

Surplus before investment income 15 (2 284) 11 921

Investment income 16 157 105 136 077Fair value adjustments 2 386 375






Accumulated funds

Total funds

N$ ‘000 N$ ‘000

Balance at 01 March 2011 1 233 151 1 233 151Changes in fundsTotal comprehensive income for the year 148 373 148 373Transfer to Development Fund (25 082) (25 082)

Total changes 123 291 123 291

Balance at 01 March 2012 1 356 442 1 356 442Changes in fundsTotal comprehensive income for the year 157 207 157 207Transfer to Development Fund (25 726) (25 726)


Balance at 28 February 2013 1 487 923 1 487 923






Notes 2013 2012

N$ ‘000 N$ ‘000


Cash used in operations 17 (3 084) 36 571

Investment income 157 105 136 077

Net cash from operating activities 154 021 172 648


Purchase of property, plant and equipment 4 (6 404) (6 253)

Sale of property, plant and equipment 4 98 335Purchase of intangible assets 5 (1 558) (597)Loans to associated funds repaid 286 -Purchase of financial assets (114 458) (217 384)

Other non-cash item 20 1 046 -

Net cash from investing activities (120 990) (223 899)

Cash flows from financing activities

Total cash movement for the year 7 305 (76 333)Cash at the beginning of the year 4 278 80 611

Total cash at end of the year 9 11 583 4 278



Accounting Policies

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Social Security Act of 1994. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Namibia Dollars.




Trade receivables, Held to maturity investments and Loans and receivables

The fund assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the fund makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that

correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.

Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the fund is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The fund uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period.

The 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 fund for similar financial instruments.

Impairment testing

The fund reviews and tests the carrying value of assets when events or changes in circumstances suggests that the carrying amount may not be recoverable.




Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 10 - Provisions. Depreciation rates

The fund is required to assess residual values and the remaining useful lives of its property, plant and equipment on an annual basis. Refer to note 1.3.

1.2 Investment property

Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the fund, and the cost of the investment property can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

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.

Fair value

Subsequent to initial measurement investment property is measured at fair value.

A gain or loss arising from a change in fair value is included in net profit or loss for the period in which it arises.

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:• it is probable that future economic benefits

associated with the item will flow to the company; and

• the cost of the item can be measured reliably. •Property, plant and equipment is initially measured at cost.Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs 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.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount.

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised.

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

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

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

Item Average useful lifeBuildings 50 yearsFurniture and fixtures 10 yearsMotor vehicles 8 yearsOffice equipment 10 yearsComputer equipment 5 years

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





1.3 Property, plant and equipment (continues)

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss 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 fund 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. These assets are not accounted for as non-current assets held 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.

1.4 Intangible assets

An intangible asset is recognised when: it is probable that the expected future economic

benefits that are attributable to the asset will flow to the entity; and

the cost of the asset can be measured reliably. Intangible assets are initially recognised at cost.• Expenditure on research (or on the research phase

of an internal project) is recognised as an expense when it is incurred.

• 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. 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.

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. 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 life.

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

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an 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.

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

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

Item Useful lifeSoftware license 3 years


Classification

The company classifies financial assets and financial liabilities into the following categories:

Financial assets at fair value through profit or loss - designated

Held-to-maturity investment Loans and receivables Financial liabilities at fair value through profit or

loss - designated Financial liabilities measured at amortised cost





Classification (Continued)

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition. Classification is re-assessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

Initial recognition and measurement

Financial instruments are recognised initially when the fund becomes a party to the contractual provisions of the instruments.

The fund classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are classified as available-for-sale financial assets.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss. Regular way purchases of financial assets are accounted for at settlement date.


Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the period.

Net gains or losses on the financial instruments at fair value through profit or loss exclude dividends and interest.

Dividend income is recognised in profit or loss as part of other income when the fund’s right to receive payment is established.


Held-to-maturity investments are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.



At each reporting date the fund assesses all financial assets, other than those at fair value through profit or loss, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the fund, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity as a reclassification adjustment to other comprehensive income and recognised in profit or loss.

Impairment losses are recognised in profit or loss.

Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed




Impairment losses are recognised in profit or loss (Continued)

Derecognition

what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.


Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the fund has transferred substantially all risks and rewards of ownership.

Fair value determination

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the fund establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Loans to (from) related funds

These include loans to and from related funds and are recognised initially at fair value plus direct transaction costs.

Loans to related funds are classified as loans and receivables.Loans from related funds are classified as financial liabilities measured at amortised cost.


Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in profit or loss.



Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly




Cash and cash equivalents (continued)

liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.6 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.

Operating leases - lessor

Operating lease income is recognised as an income on a straight-line basis over the lease term.

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 profit or loss.

Operating leases – lessee

Operating 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. This liability is not discounted. Any contingent rents are expensed in the period they are incurred.

1.7 Impairment of assets

The fund assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the fund estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the fund also: tests intangible assets with an indefinite useful

life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

tests goodwill acquired in a business combination for impairment annually.

If 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 recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.



1.8 Employee benefits Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.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.




Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

Consideration is given to any event that could impact the funds up to the end of the reporting period where the interim valuation is performed at an earlier date.


To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in profit or loss over the expected average remaining service lives of participating employees. Actuarial gains

or losses within the corridor are not recognised.Actuarial gains and losses are recognised in the year in which they arise, in other comprehensive income.

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the fund is demonstrably committed to curtailment or settlement.





Provisions are recognised when: the fund has a present obligation as a result of a

past event; it is probable that an outflow of resources

embodying economic benefits will be required to settle the obligation; and

a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised



1.9 Provisions and contingencies (continued)

when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the

reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

A constructive obligation to restructure arises only when an entity:

has a detailed formal plan for the restructuring, identifying at least:

- the business or part of a business concerned;- the principal locations affected;

- the location, function, and approximate number of employees who will be compensated for terminating their services;- 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.

1.10 Revenue

Contribution revenue is recognised when the right to receive the payment is established, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the fund.

Investment income

Interest is recognised, in profit or loss, using the effective

interest rate method.

Dividends are recognised, in profit or loss, when the fund’s right to receive payment has been established.

Rental income

Revenue from rental is recognised on a straight line basis if there is a fixed escalation, otherwise when the rental become due.

When substantially all the risks and rewards of ownership have not been transferred or retained, the financial asset is derecognised if they are no longer controlled. However if control in this situation is retained, the financial assets are recognised only to the extent of continuing involvement in those assets. Initial direct costs incurred in negotiating and arranging the operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.11 Outstanding claims

Full provision is made for the estimated cost of claims including administrative costs notified, but not settled at statement of financial position date. Provision is also made for the expected cost of claims incurred but not initiated at the statement of financial statement date.

1.12 Claims incurred

Claims incurred consist of claims and claims handling expenses paid during the financial year and are charged to the statement of comprehensive income as incurred.



In the current year, the fund has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:




IFRS 7 Amendments to IFRS 7 Disclosures - Transfers of financial assets

Amended the required disclosures to help users of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position.

The effective date of the amendment is for years beginning on or after 01 July 2011.

The fund has adopted the amendment for the first time in the 2013 annual financial statements.


The fund has not early adopted any standards and interpretations.


The commission has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the commission’s accounting periods beginning on or after 01 March 2013 or later periods:


This new standard was issued as part of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the Standard includes chapters for classification, measurement and derecognition of financial assets and liabilities.

The following are the main changes from IAS 39: Financial assets will be categorised as those


Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual

cash flows (where the contractual cash flows represent payments of principal and interest only). All investments are to be subsequently measured at fair value.

Under certain circumstances, financial assets may be designated as at fair value

For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole instrument is classified in accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the provisions of IAS 39 still apply.

Voluntary reclassification of financial assets is prohibited. Financial assets shall be reclassified if the entity changes its business model for the management of financial assets. In such circumstances, reclassification takes place prospectively from the beginning of the first reporting period after the date of change of the business model.

Financial liabilities shall not be reclassified. Investments in equity instruments may be measured

at fair value through other comprehensive income. When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition of the investment. The election may be made per individual investment.

IFRS 9 does not allow for investments in equity instruments to be measured at cost.

The classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss.





The fund expects to adopt the standard for the first time in the 2014 annual financial statements.

It is unlikely that the standard will have a material impact on the fund’s annual financial statements.


New standard setting out guidance on the measurement and disclosure of items measured at fair value or required to be disclosed at fair value in terms of other IFRS’s.





Require recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements

Introduce enhanced disclosures about defined benefit plans

Modify accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits

Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features




IAS 19 Employee Benefits Revised (continued)

The effective date of the amendment is for years beginning on or after 01 January 2013.The fund expects to adopt the amendment for the first time in the 2014 annual financial statements.It is unlikely that the amendment will have a material impact on the fund’s annual financial statements.

2.4 IAS 32 Amendment to IAS 32 Financial Instruments: Presentation

Offsetting financial assets and financial liabilitiesThe amendment has clarified and expanded the application guide in relation to the offsetting of financial assets and financial liabilities in respect of:

. The meaning of ‘Wcurrently has a legally enforceable right of set-off’

. The application of simultaneous realisation and settlement

. The offsetting of collateral amounts

. The unit of account for applying the set-off requirements

The fund has not yet established the impact of the adoption of the amendment.

3. Investment property

2013 2012

Cost / Valuation

Accumulated depreciation

Carrying value

Cost / Valuation


Carrying value

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000Investment property 5 961 - 5 961 3 575 - 3 575

Reconciliation of investment property - 2013

Opening balance

Fair value adjustments Total

N$’000 N$’000 N$’000Investment property 3 575 2 386 5 961


Opening balance


N$’000 N$’000 N$’000Investment property 3 200 375 3 575

Land and buildings comprise Erf 1983 Keetmanshoop (2624 square metres with office buildings thereon).




4. Property, plant and equipment

2013 2012

Cost / Valuation


Carrying value

Cost / Valuation


Carrying value

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000

Land 3 996 - 3 996 3 936 - 3 936Buildings 29 329 (3 556) 25 773 26 423 (2 612) 23 811Furniture and fixtures 2 804 (1 450) 1 354 2 350 (1 245) 1 105Motor vehicles 2 618 (1 261) 1 357 2 616 (840) 1 776Office equipment 2 024 (1 065) 959 2 125 (1 276) 849Computer equipment 6 861 (4 519) 2 342 4 995 (3 228) 1 767Total 47 632 (11 851) 35 781 42 445 (9 201) 33 244




Reconciliation of property, plant and equipment - 2013

Opening balance Additions Disposals Adjustment Depreciation Total

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000Land 3 936 72 - (12) - 3 996Buildings 23 811 3 239 - (333) (944) 25 773Furniture and fixtures 1 105 570 - (107) (214) 1 354Motor vehicles 1 776 190 (119) (23) (467) 1 357Office equipment 849 603 - (259) (234) 959Computer equipment 1 767 1 730 (6) (311) (838) 2 342

33 244 6 404 (125) (1 045) (2 697) 35 781


Opening balance Additions Disposals Depreciation Total

N$’000 N$’000 N$’000 N$’000 N$’000Land 2 854 1 082 - - 3 936Buildings 21 465 3 203 - (857) 23 811Furniture and fixtures 982 327 (37) (167) 1 105Motor vehicles 1 767 559 (130) (420) 1 776Office equipment 702 386 (51) (188) 849Computer equipment 1 856 696 (194) (591) 1 767

29 626 6 253 (412) (2 223) 33 244

Land and buildings comprise Erf 119 Grootfontein (1 329 square metres, registration division f3), Erf 120 Grootfontein (1 377 square metres with buildings thereon), Erf 858 Walvis Bay (1 250 square metres with buildings thereon) Erf 1 589 Oshakati (3 515 square metres without improvements), Erf 2 269 Windhoek (10 092 square metres), Erf 1 959 Otjiwarongo (1 081 square metres) and Erf 1 965 Otjiwarongo (1 310 square metres).




5. Intangible assets

2013 2012

Cost / Valuation

Accumulated amortisation

Carrying value

Cost / Valuation

Accumulated amortisation

Carrying value

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000

Software license 2 873 (1 138) 1 735 1 315 (536) 779

Reconciliation of intangible assets - 2013

Opening balance Additions Amortisation Total

N$’000 N$’000 N$’000 N$’000Software license 779 1 558 (602) 1 735



N$’000 N$’000 N$’000 N$’000

Software license 482 597 (300) 779

6. Loans to / (from) related funds

Related funds2013 2012

N$’000 N$’000Development Fund (73) 274Interfund payable - (119)Employees’ Compensation Fund (2 527) (2 636)Social Security Commission (3 561) (3 583)Employees’ Compensation Fund 49 4Social Security Commission 3 015 3 130

(3 097) (2 811)

The above loans are interest free, unsecured and have no fixed terms of repayment.

Current assets 3 064 3 408Current liabilities (6 161) (6 219)

(3 097) (2 811)




7. Investments

2013 2012N$’000 N$’000

Held for trading at fair value through profit or lossFunds held with professional asset managers 1 451 719 1 306 729

Funds held with professional managers are fair valued by professional managers at year end.

Held to maturity

Fixed term deposits

Fixed term deposits are held with the financial institutions.62 627 93 159

Total investments 1 514 346 1 399 888

Current assetsAt fair value through profit or loss 1 451 719 1 306 729Held to maturity 62 627 93 159

1 514 346 1 399 888


The fair value of listed or quoted investments is based on quoted market price. Fair value is determined annually at statement of financial position date.


For financial assets recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs used to make the measurements.

Level 1Financial assets held at fair value through profit or loss 1 451 719 1 306 729




8. Trade and other receivables2013 2012

N$’000 N$’000

Gross trade receivables 70 1401 68 126Other receivables 334 1 664Trade receivables (credit balances) (26 665) (32 471)Provision for bad debts (30 909) (29 581)

12 900 7 738

The Fund’s credit period on the contribution income is 30 days. No interest is charged on the trade receivables from the first 30 days from the date of invoicing. Thereafter, interest is charged on the trade receivable at 20% per annum on the outstanding balance. The Fund has a policy of providing for accounts receivable which are outstanding for 12 months or more as potential bad debts.

There is no credit scoring system to access the potential customer’s credit quality as there is no external credit rating for all the employers in Namibia.

Included in the Fund’s trade receivable are debtors with carrying amounts of N$ 2 955 000 (2012: N$ 2 659 000) which are past due at the reporting date for which the Fund has not provided as at year end. The Fund does not hold any collateral over these balances. The average age of these receivable is +60/+90 days (2012: +60/+90 days).

Ageing of past due but not impaired90 days 206 -60 days 2 749 2 659

2 955 2 659

Movement in the allowance for doubtful debtsBalance at beginning of the year 29 581 24 630Amount written off as uncollectible (6 141) -Movement in bad debt during the year 7 469 4 950

30 909 29 580

Ageing of impaired trade receivables

60 days - 1 82190 days 431 678+120 days 30 478 27 081

30 909 29 580





2013 2012N$’000 N$’000

Cash and cash equivalents consist of:Bank balances 11 583 4 278

Short-term deposits are held with financial institutions. The average investment Period is 1 to 3 months from the statement of financial position date and the interest Rates are between 4.25% and 8.61% per annum.

10. Provisions

Reconciliation of provisions - 2013

Opening balance Movement Total

N$’000 N$’000 N$’000Unreported incurred claims 53 855 1 698 55 553Reported incurred claims 18 406 (11 295) 7 111Legal costs 150 - 150

72 411 (9 597) 62 814



N$’000 N$’000 N$’000Unreported incurred claims 52 158 1 697 53 855Reported claims 13 684 4 722 18 406Legal costs 150 - 150

65 992 6 419 72 411

Non-current liabilities 943 1 444Current liabilities 61 871 70 967

62 814 72 411

Fair value determination of the unreported incurrent claims

Death claims 709 583Maternity leave 19 614 15 327Retirement benefits 3 085 2 233Sick leave 6 645 6 312Claims handling provision 22 500 23 200Data integrity provision 3 000 6 200

55 553 53 855


2013 2012N$’000 N$’000




10. Provisions (continued)

The unreported incurred claims represent the management estimate as at 28 February 2013 based on actuarial valuation at that date.

The unreported but incurred claims were determined based on basic chain ladder method. The method involves the following:

The runoff claims for Maternity Leave, Sick Leave and Death Benefit Fund have been grouped into the following subgroups:i. Death;ii. Maternity Leaveiii. Sick Leaveiv. Retirement benefit

Runoff triangles for each of these subgroups were performed by grouping the data by accident year and payment year. Development factors based on the accumulated claims paid after each period in respect of claims from same year of accident were used. These development factors were used to project the expected claims during each future period. By using the chain ladder method, the following assumptions were made:

i. The claims development factors will remain stableii. Past claims experience is a suitable guide to future claims experience

The IBNR liability as calculated using basic chain ladder method was not discounted resulting in a more prudent estimate of the IBNR.

Part of the expenses that the Commission will be paying in future will be related on handling IBNR claims. Thus a Claims Handling Provision was included in the IBNR for these expenses. The actuaries calculated the ratio of expenses paid relative to claims paid in 2013 according to the actuarial valuation. This ratio was applied to the IBNR liability to arrive at an estimate of the claims handling provision. A claims handling provision equal to 75% of the IBNR liability for the fund was set to cover these expenses.

Data integrity provision was was reduced from 25% to 10% of IBNR. This is due to the fact that data provided by the commissioners does not sizeable differ from the draft financials.

11. Trade and other payables2013 2012

N$’000 N$’000

Trade payables 13 412 5 595Accrued leave pay 11 065 8 789Accrued bonus 1 312 1 166Audit fee 267 -Unclaimed monies 41 559Unknown deposits 592 323Accrued expenses 1 657 1 368Other payables 126 38

28 472 17 838




12. Revenue2013 2012

N$’000 N$’000

Contributions 276 873 252 393Contribution interest 3 254 2 288

280 127 254 681

13. Claims

Maternity leave 105 981 102 674Sick leave 16 969 16 868Death benefit 8 465 7 575Retirement benefit 16 639 11 329

148 054 138 446

14. Other income

Rental income 803 872Miscellaneous income 839 574

1 642 1 446



Operating lease charges

Premises

Contractual amounts 1 581 1 009

Loss on sale of property, plant and equipment (27) (77)Amortisation on intangible assets 603 299Depreciation on property, plant and equipment 2 698 2 223Employee costs 82 136 70 642


Interest incomeFinancial institutions 152 441 130 448Fixed deposits 4 664 5 629

157 105 136 077





The value of the assets of GIPF is valued by actuaries every third year. The latest valuation was done at at 31 March 2009, and the valuator reported that the fund was in good financial position, and that the present rates of contributions were adequate to enable the fund to provide benefits to which members are entitled. With reported actuarial value of liabilities and reserves of N$ 28.28 billion and assets of N$ 29.941 billion, the funding level at valuation date was 105.9%.

The method used to place value on the past services liabilities and the required future contribution rate is known as the project unit credit method based on actuarial valuations.

Based on the data disclosed by the actuarial valuation, the surplus is within acceptable range to prevent a short-fall within the foreseeable future and therefore places no current obligation on the fund to provide for.

The performance of the fund’s investments is benchmarked on a quarterly basis by its investment consultant, Human Employee Benefits Company (Pty) Ltd.


17. Cash used in operations2013 2012

N$’000 N$’000

Surplus before taxation 157 207 148 373Adjustments for:Depreciation and amortisation 3 301 2 522Loss on sale of assets 27 77Investment income (157 105) (136 077)Fair value adjustments (2 386) (375)Movements in provisions (9 597) 1 697Changes in working capital:Trade and other receivables (5 165) 4 368Trade and other payables 10 634 15 986

(3 084) 36 571





2013 2012

N$’000 N$’000

Fees 513 318

20. Other non-cash itemHeading

Property, plant and equipment adjustments 1 046 -

21. Commitments

Authorised capital expenditure

Not yet contracted for but not authorised

Property, plant and equipment 109 346 127 704

This committed expenditure relates to property, plant and equipment and investment property and will be financed by retained earnings, existing cash resources and funds internally generated.

22. Contingencies

1. Litigation is in the process against the fund relating to a labour matter on unfair dismissal. In this Labour matter, Social Security Commission appealed the DLC’s judgment. The matter was set down for 23 November 2011 to 2 December 2011. This matter which was set down for hearing on 20 October 2012, will be postponed because a staff member does not have a legal representative. Our instructions are that this be a final postponement and that he bears the costs occasioned by this postponement. (The Fund’s Legal Representative) was also requested to provide the Commission with a report on the prospects of success in this matter considering the cost expended on this matter to date.





22. Contingencies (continues)

The Court ordered Social Security Commission to reinstate and compensate the complainant for his loss of income from 20 May 2005 until his date of reinstatement minus the income he received while in the employ of Trustco Group Holdings Limited.

2. A letter was written to GIPF requesting the GIPF to withdraw Mr. Spanneberg’s pension benefits of N$ 440 471,83 in favour of the Commission as compensation in terms of section 37 D (b) (ii) (aa). GIPF advised that the benefits cannot be withdrawn in favour of the Social Security Commission. Mr. Marcus was instructed to issue summons in this matter.

3. A legal opinion was obtained in this regard. The further investigations conducted did not yield any positive results as to the filing of an unfair dismissal case that was lodged against the Minister of Labour. Mrs. Onesmus was recently charged due to an investigation by the Anti-Corruption Commission in relation to the misadministration charges that were

previously leveled against her through a civil suit which was later settled. In September 2012, Mrs. Onesmus telephonically requested the Commission to complete her pension withdrawal form and was advised that the Commission has no intention of complying with her request. Instead the Commission is considering bringing an application in terms of section 300 (1) of the Criminal Procedure Act 51 of 1977 during her criminal trial. She promised to make a written request to the Commission and was advised that the Commission will then advise her based on her written request.

4. A follow up letter was written to Dr. Weder, Kauta and Kamuhanga Legal Practitioners regarding the Avid case to determine the status of the N$ 3.5 million held in trust by the Trustee of Mr. Josea the purpose thereof, amongst other issues. A progress report from Dr. Weder, Kauta and Hoveka Legal Practitioners was received and submitted to the Audit and Risk Committee for noting during 22 October 2012 meeting. At the meeting held on 22 November 2012 to discuss the status of the N$ 3.5 million, Social Security Commission was informed that the N$ 3.5 million was paid to Mr. Josea. As per the Attorney General’s advise, the Social Security

Commission’s last available option is to wait for the criminal proceedings to commence, and to request the Prosecutor General’s Office to impose a suspensive condition during sentencing to ensure that the Social Security Commission is compensated in the amount owed to the Social Security Commission. Only after having exhausted these options should the line Ministry request Treasury to write off the debt or the balance thereof. The matter is set down for 14 February 2014.

5. The High Court referred this matter for a hearing in terms of section 56 of the ECA. However, Social Security Commission appealed the High Court’s judgment to the Supreme Court. The matter was heard in July 2011 and judgment was reserved. This matter will provide guidance as to how Social Security Commission can deal with cases that are brought outside the prescription period (section 54 cases). The fund is still awaiting judgment in this matter.

6. A legal case against Cheetah Security for failure to register employees with the Social Security Commission. The defendant pleaded guilty and was fined by the Magistrates’ Court.

7. A case involving an employee who defrauded the Commission an amount of N$ 54,431 and was charged for fraud as a result. The fund contacted the prosecutor and was advised that the trial of this matter will be heard de novo (a fresh) because there are parts of the record that are missing.


9. The Namibian police are investigating an alleged death claim fraud case, where the deceased was married to two women and one of the wives claimed his death benefits of N$ 5 000 from Social Security Commission. The first death certificate submitted with the claim indicated that the deceased was single. A subsequent one revealed that the deceased was in fact married. Legal is assisting the investigation officer with the claim documents as fund would be interested to know whether there is any involvement from within Social Security Commission.

Thus far the investigation by the tracing agent revealed




22. Contingencies (continued)

that Mr. Schnugh is married out of community of property. The agent ascertained that Mr. Schnugh does not own the house in which he is currently living. He is in fact renting the said property. Mr. Schnugh however promised to pay an amount of N$ 1 000 directly into the Bank account of the Social Security Commission by the end of November 2012. No payment has been received to date. Mr. Schnugh promised to make a

payment end of January 2013. On 23 January 2013 Mr. Schnugh was advised that Social Security Commission is considering handing the matter back to its lawyers for debt collection purposes. It should however be noted that the risk is that the judgment debtor may still not be in a position to repay the debt, which may result in Social Security Commission incurring extra legal costs in pursuit of collecting the outstanding debt.

10. The fund sued and obtained judgment against Schnugh for defrauding the Commission in the amount of N$ 196 073 in respect of vehicles that were sold at an auction between February and June 2007. Schnugh did not pay the proceeds of the sale of the vehicles to the Commission. Schnugh was ordered to pay N$ 5,000 per month to the Commission. After the letter was written to Hengari, Kangueehi & Kavendji Incorporated, they reported that Schnugh cannot be traced. Hengari et al were advised to provide the latest contact details of the client and lost payments received. A tracing agent was appointed to trace Schnugh.

Thus far the investigation by the tracing agent revealed that Mr. Schnugh is married out of community of property. The agent ascertained that Mr. Schnugh does not own the house in which he is currently living. He is in fact renting the said property. Mr. Schnugh however promised to pay an amount of N$ 1 000 directly into the Bank account of the Social Security Commission by the end of November 2012. No payment has been received to date. Mr. Schnugh promised to make a payment end of January 2013.

On 23 January 2013 Mr. Schnugh was advised that Social Security Commission is considering handing the matter back to its lawyers for debt collection purposes. It should however be noted that the risk is that the judgment debtor may still not be in a position to repay the debt, which may result in Social Security

Commission incurring extra legal costs in pursuit of collecting the outstanding debt.

11. The fund bought erf 1610 from the Municipality of Keetmanshoop on 28 March 2001 for N$ 24 000. The erf was paid for on 28 March 2001 but there was no transfer into the fund’s name. During April 2012, the fund brought an application to the High Court to order the Municipality to transfer erf 1610 into the it’s name. The fund is advised that the Municipality has signed the agreement. The fund accepted a settlement of just over N$ 20 000 as wasted costs for the abovementioned application. The property was registered into the name of the Social Security Commission.

12. This matter in May 2007 Mr. Dumeni’s leg was amputated. In 2008 he submitted a claim for compensation under the Employees Compensation Act claiming that an injury that he sustained at work on resulted in the amputation of his leg. The Commission paid for Mr. Dumeni’s prosthesis in the amount of N$ 88 100. Mr. Dumeni then demanded that the Commission provide him with a monthly pension since he is now disabled.

Upon further investigation it was found that Mr. Dumeni’s initial claim was brought outside the period of six months as required by the Employees Compensation Act. Mr. Dumeni was further subjected to a medical examination in terms of Section 60 of the Employees Compensation Act to determine if the amputation of his leg was as a result of the injury that he allegedly sustained at work on 18 July 1996. The medical report from the doctor revealed that the 1996 injury could not have resulted in the amputation of Mr. Dumeni’s leg. The medical report further provided that the amputation was as a result of a pre- existing condition.

The formal hearing in terms of section 56 of the Employees Compensation Act was conducted on 15 October 2012 and 30 November 2012. The chairperson rendered his advice in the form of recommendations to the Social Security Commission for its final decision. The recommendations are to the effect that the 1996 injury did not cause the amputation of Mr. Dumeni’s leg. The Commission is thus entitled to claim the compensation paid to Mr. Dumeni. However, the recovery of the compensation paid is not recommended.




23. Related parties

RelationshipsControlling organisation Social Security Commission

Related Funds Development FundEmployees’ Compensation Fund Accident Pension Fund National Pension Fund National Medical Benefit Fund

Commissioners Mr. B R R Kukuri (Chairperson) MR. A E BiwaMs. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H ShikongoMr. J T //Garoeb Ms. O M L M Kutenda

Related party balances2013 2012

N$’000 N$’000Loan accounts - Owing (to) / by related partiesSocial Security Commission (3 561) (3 583)Employee Compensation Fund (2 527) (2 636)Development Fund (73) 274Social Security Commission 3 015 3 130Employees Compensation Fund 49 4

Related party transactions

Transfer of funds to related party

Development Fund 25 726 25 082

24. Commissioners’ emoluments

Emoluments of N$ 1 491 000 (2012: N$ 592 000) were paid to the commissioners during this year.




25. Risk management


The primary objective of the investment of Commis-sion’s Fund is to balance the safety needs, liquidity and return objectives of the Fund against the liability structure and the general objectives of each Fund.

The investment portfolio shall be diversified to minimise the risk of loss resulting from concentration of assets in a specific maturity, specific issuer or a specific class of securities. Further diversification will be provided by employing more than one asset manager with relatively low correlation in their investment performance based on investment style.

The commissioners recognise that investment management is a long-term process and there will be fluctuations in the short-term. However, long-term objective will only be met if they are consistently achieved over a shorter period.

Real return (i.e. returns in excess of inflation) is required across the range of portfolios, which compensate adequately for the levels of risks inherent in the portfolio. The requirement for real returns shall

not apply to the working capital portfolio.

Preservation of capital in real terms and absolute terms is an important consideration for the commission in the long-term.

Liquidity risk

Liquidity risk is the risk that the fund will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk arises when there is mismatching between the maturity of liabilities and assets.

The fund is exposed to daily calls on its available cash resources from claims. Liquidity is the risk that cash may not be available to pay obligations when due at a reasonable cost. The broad sets limits on the minimum proportion of maturity funds available to meet such calls.

The fund actively manages its cash resources, split between short-term and long-term to ensure sufficient cash is at hand to settle claims liabilities, based on monthly float projections. The fund has significant liquid resources to cover its obligations.






Held at fair value

through profit or loss

Held at maturity


amortised at cost

N$’000 N$’000 N$’000 N$’000Trade and other receivables 12 901 - - -Investments - 1 451 719 62 627 -Cash and cash equivalents 11 583 - - -Loans from other funds (3 097) - - -Trade and other payables - - - (28 472)Provisions - (62 814) - -

At 29 February 2012 Loans and receivables

Held at fair value


Held at maturity

Financial liabilities at

amortised cost

N$’000 N$’000 N$’000 N$’000

Trade and other receivables 7 738 - - -Investments - 1 306 729 93 159 -Cash and cash equivalents 4 278 - - -Loans from other funds (2 930) - - -Trade and other payables - - - (17 838)Provisions - (72 411) -


25. Risk management (continued)

Liquidity risk




Interest rate risk

Interest rate risk arises primarily from the fund investments in fixed income securities, which are exposed to fluctuations in interest rates. Exposure to interest rate risk is monitored through several measures that include monitoring of returns and switching investments to take advantage of high returns in certain instruments.

An increase or decrease of 1% in the respective interest rates would result in the following changes in the fair value or amortised costs of these financial instruments.

The following table demonstrates the sensitivity to a reasonably possible change in interest rate on cash and cash equivalents affected. The impact is as follows:

2013 2012N$’000 N$’000

Effect on surplus for the yearIncrease / (decrease) of 0.5% in interest rates 5 344 541Increase / (decrease) of 1% in interest rates 10 688 1 082

1

16 032 1 623


2013Current

interest rateDue in lessthan a year

N$’000 Trade and other receivables 20.00% 16 159

Funds held at fair value through profit or loss 8.17% 1 521 511Cash and cash equivalents 4.50% 12 075Funds held to maturity 5.50% 66 071Trade and other payables -% (28 472)Loans to other funds -% (3 097)Provisions -% (62 814)

2012Current

interest rateDue in lessthan a year N$’000

Trade and other receivables 20.00% 10 754Funds held at fair value through profit or loss -% 1 306 729Cash and cash equivalents 4.75% 4 278Funds held to maturity 6.91% 93 159Trade and other payables -% (17 838)Loans to other funds -% (2 930)Provisions -% (72 411))





Credit risk


Key areas where the fund is exposed to credit risk are:

- accounts receivables

- investments and cash equivalents

Credit risk management Trade and other receivables

The fund’s maximum exposure to credit risk at the reporting date is the carrying value of financial assets disclosed in notes 7 and 8. The fund does not hold any collateral as security. Receivables are presented net of the provision for impairment losses.


The fund’s cash and cash equivalents and investments are placed with high credit quality financial institutions. The fund has a policy of limiting the amount of credit exposure to any one financial institution. The maximum exposure at the reporting date is the carrying value of cash and cash equivalents disclosed in note 9 and the carrying value of investments in note 7. The fund invests only with reputable financial institutions and the credit quality of financial assets are therefore good.

Financial instruments





2013 2012N$’000 N$’000

Financial assetsFair value through profit and loss 1 451 719 1 306 729Held to maturity 62 627 93 159Trade and other receivables 12 904 7 739

Cash and cash equivalents 11 583 4 278

1 538 833 1 411 905

Financial liabilitiesLoans to other funds 3 097 2 930Trade and other payables 28 472 17 719

Provisions 101 171 72 411

132 740 93 060



Financial Instruments


DETAILED STATEMENT OF COMPREHENSIVE INCOME


Market risk

Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of financial instruments from fluctuations in the interest rate and equity prices. Financial assets are disclosed in the following classes based on their similar characteristics:


Market risk arises in the fund due to fluctuations in both the value of liabilities and value of investments held.

Management has established a policy on market risk which sets out principles that the fund is expected to adopt in respect of management of the key market risks to which the fund is exposed. The board monitors adherence to this market risk policy and regularly reviews how management is managing these risks through the investment committee and audit and risk committee. For each of the major components of market risk, described in risk management note, the management has put in place additional policies and

procedures to set out how risk should be managed and monitored, and the approach to setting an appropriate risk appetite.

Price riskThe fund is subject to price risk due to the daily changes in the market values of its investments held by asset managers.

The fund’s objective is to earn competitive relative returns by investing in a diverse portfolio of high-quality, liquid securities. Portfolio characteristics are analysed regularly and equity price risk is actively managed through a variety of modeling methods by asset managers. The fund’s holdings are diversified across industries, and concentration in any one company or industry is limited by parameters established by asset managers and statutory requirements. The fund’s exposure to movement in equities is 29% for equities on the funds held by asset managers.


At 28 February 2013, the fund’s listed equities were recorded at their fair value of N$ 445.6 million (2012:N$ 418.2 million). A hypothetical 10% decline or increase in each individual share price would decrease/increase the surplus for the year by N$ 44.6 million (2012: N$ 41.8 million).



EMPLOYEES’ COMPENSATION FUNDANNUAL FINANCIAL STATEMENTS





EMPLOYEES’ COMPENSATION FUNDAnnual Financial Statements for the year ended 28 FEBRUARY 2013




The Employees’ Compensation Fund principal activity is to compensate for disablement caused by accidents to or industrial diseases contracted by employees in the course of their employment or for death resulting from such accidents or diseases. The Fund was established under the Employees’ Compensation Act 30 of 1941.


Mr. B R R Kukuri (Chairperson) Mr. A E BiwaMs. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H ShikongoMr. J T //Garoeb Ms. O M L M Kutenda

Auditors Office of the Auditor-GeneralRegistered office Cnr. A. Kloopers & Haupt Streets

KhomasdalWindhoekNamibia




Index Page

Commissioner’s Report 118 - 119Statement of Financial Position 120Statement of Comprehensive Income 121Statement of Changes in Equity 122Statement of Cash Flows 123Notes to the Annual Financial Statements 124 - 151




Commissioner’s Report



The fund’s principal activity is to compensate for disablement caused by accidents to or industrial diseases contracted by employees in the course of their employment or for death resulting from such accidents or diseases. The fund was established under the Employees’ Compensation Act 30 of 1941 and operates in Namibia.

The operating results and state of affairs of the fund are fully set out in the attached annual financial statements and do not in our opinion require any further comment.

Net profit of the fund was N$ 91 517 000 (2012: N$ 69 775 000).


The commissioners are not aware of any matter or circumstance arising since the end of the financial year.

3. Commissioners’ interest in contracts

The commissioners did not have any interests in the contracts entered into by the fund during the year.

4. Non-current assets

There were additions to Property, plant and equipment amounting to N$ 1 265 000 (2012: N$ 1 826 000) during the year under review, and disposals with a carrying amount of N$ 25 000 (2012: N$0) were made.

There were additions to Intangibles amounting to N$ 306 000 (2012: N$ 250 000) during the year under review.

5. Commissioners

The commissioners of the fund during the year and to the date of this report are as follows:NameMr. B R R Kukuri Mr. A E Biwa Ms. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H ShikongoMr. J T //Garoeb Ms. O M L M Kutenda




6. Secretary

The secretary of the commission is Emma Kantema-Gaomas:


Postal address Private Bag 13223Windhoek

Namibia

7. Auditors

Office of the Auditor-General will continue in office in accordance with section 19 of the Social Security Act 34 of 1994.




Notes 2013 2012N$ ‘000 N$ ‘000

Assets

Non-Current AssetsInvestment property 3 5 961 3 575Property, plant and equipment 4 36 386 35 798Intangible assets 5 845 658

43 192 40 031

Current Assets

Loans to related funds 6 8 252 9 430Investments 7 497 336 417 004Trade and other receivables 8 13 997 9 646Cash and cash equivalents 9 10 347 664

529 932 436 744

Total Assets 573 124 476 775


FundsAccumulated funds 450 073 358 556

Liabilities

Non-Current LiabilitiesProvisions 11 78 053 7 994

Current Liabilities

Loans from related funds 6 6 161 7 245Trade and other payables 10 6 067 5 488Provisions 11 32 770 29 492

44 998 42 225

Total Liabilities 123 051 118 219





Notes 2013 2012

N$ ‘000 N$ ‘000

Revenue 12 90 094 79 978

Claims 13 (23 667) (22 730)


Other income 14 4 920 638Operating expenses (27 688) (24 448)Surplus before investment income 15 43 659 33 438Investment income 16 45 472 35 962Fair value adjustments 17 2 386 375Surplus for the year 91 517 69 775





Accumulated funds Total equity

N$ ‘000 N$ ‘000

Balance at 01 March 2011 288 781 288 781Changes in fundsTotal comprehensive income for the year 69 775 69 775


Balance at 01 March 2012 358 556 358 556Changes in fundsTotal comprehensive income for the year 91 517 91 517Total changes 91 517 91 517





Notes 2013 2012

N$ ‘000 N$ ‘000


Cash generated from operations 18 45 875 34 712

Interest income 45 472 35 962Net cash from operating activities 91 347 70 674


Purchase of property, plant and equipment 4 (1 265) (1 826)

Purchase of intangible assets 5 (306) (250)Loans (advanced to) / received from related funds 94 (2 185)Purchase of financial assets (80 332) (102 190)Other non-cash item 21 145 -


Total cash movement for the year 9 683 (35 777)Cash at the beginning of the year 664 36 441

Total cash at end of the year 9 10 347 664



Accounting Policies


The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Social Security Act 34 of 1994. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Namibia Dollars.




Trade receivables, Held to maturity and through profit or loss investments and Loans and receivables

The fund assesses its Trade receivables, Held to maturity and through profit or loss investments and Loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the fund makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for Trade receivables, Held to maturity and through profit or loss investments and Loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national

and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.


The fair value of financial instruments traded in active markets (such as investments held with asset managers) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the fund is the current bid price.


The 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 fund for similar financial instruments. Impairment testing





Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 11 - Provisions.

Depreciation rates


1.2 Investment property

Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the enterprise, and the cost of the investment property can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement.

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.

Fair value

Subsequent to initial measurement investment property is measured at fair value.

A gain or loss arising from a change in fair value is included in net profit or loss for the period in which it arises.


The cost of an item of property, plant and equipment is recognised as an asset when: it is probable that future economic benefits

associated with the item will flow to the fund; and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs 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.



Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value. Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

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

Item Average useful lifeBuildings 50 yearsFurniture and fixtures 10 yearsMotor vehicles 8 yearsOffice equipment 10 yearsComputer equipment 5 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous



NOTES TO THE FINANCIAL STATEMENTS


1.3 Property, plant and equipment (continued)

estimates, the change is accounted for as a change in accounting estimate.



Assets which the fund 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. These assets are not accounted for as non-current assets held 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.

1.4 Intangible assets

An intangible asset is recognised when: it is probable that the expected future economic

benefits that are attributable to the asset will flow to the entity; and

the cost of the asset can be measured reliably. Intangible assets are initially recognised at cost.Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

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. 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. 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. 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 life.

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

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an 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.

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

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

Item Useful lifeSoftware Licenses 3 years


Classification

The fund classifies financial assets and financial liabilities into the following categories:


NOTES TO THE FINANCIAL STATEMENTS


1.5 Financial instruments (continued)

Classification (continued)

Financial assets at fair value through profit or loss - designated

Held-to-maturity investment Loans and receivables Financial liabilities at fair value through profit or

loss - designated Financial liabilities measured at amortised cost







Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss. Regular way purchases of financial assets are accounted for at settlement date. Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the period.

Net gains or losses on the financial instruments at fair value through profit or loss excludes dividends and interest.Dividend income is recognised in profit or loss as part of other income when the fund’s right to receive payment is established.







In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available - for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity as a reclassification adjustment to other comprehensive income and recognised in profit or loss.


Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the





impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.




The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the fund establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Loans to (from) related funds

These include loans to and from related funds and are recognised initially at fair value plus direct transaction costs. Loans to related funds are classified as loans and receivables. Loans from related funds are classified as financial liabilities measured at amortised cost.









Held to maturity

These financial assets are initially measured at fair value plus direct transaction costs. At subsequent reporting dates these are measured at amortised cost using the





Held to maturity (continued)

effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

Financial assets that the company has the positive intention and ability to hold to maturity are classified as held to maturity.

1.6 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.

Operating leases - lessor

Operating lease income is recognised as an income on a straight-line basis over the lease term.

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 profit or loss.

Operating leases – lessee

Operating 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. This liability is not discounted.Any contingent rents are expensed in the period they are incurred.



Irrespective of whether there is any indication of impairment, the fund also:

tests intangible assets with an indefinite useful life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

tests goodwill acquired in a business combination for impairment annually.



If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.





Short-term employee benefits





For defined benefit plans the cost of providing the benefits is determined using the projected unit credit method.Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.



To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in profit or loss over the expected average remaining service lives of participating employees. Actuarial gains or losses within the corridor are not recognised.

Actuarial gains and losses are recognised in the year in

which they arise, in other comprehensive income.

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the fund is demonstrably committed to curtailment or settlement.





Provisions are recognised when: the fund has a present obligation as a result of a past

event; it is probable that an outflow of resources

embodying economic benefits will be required to settle the obligation; and

a reliable estimate can be made of the obligation.


Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not




1.9 Provisions and contingencies (Continues)

exceed the amount of the provision.

Provisions are not recognised for future operating losses. If an entity has a contract that is onerous, the

present obligation under the contract shall be recognised and measured as a provision.

1.10 Revenue - assessment income

Assessment income is recognised when the right to receive the payment is established, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the fund.

Investment income

Interest is recognised, in profit or loss, using the effective interest rate method. Dividends are recognised, in surplus or deficit, when the fund’s right to receive payment has been established.

Rental income

Revenue from rental is recognised on a straight line basis if there is a fixed escalation, otherwise when the rental become due.

When substantially all the risks and rewards of ownership have not been transferred or retained, the financial asset is derecognised if they are no longer controlled. However if control in this situation is retained, the financial assets are recognised only to the extent of continuing involvement in those assets. Initial direct costs incurred in negotiating and arranging the operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.11 Outstanding claims

Full provision is made for the estimated cost of claims including administrative costs notified, but not settled at statement of financial position date. Provision is also made for the expected cost of claims incurred but not initiated at the statement of financial statement date.

1.12 Claims incurred

Claims incurred consists claims and claims handling expenses paid during the financial year and are charged to the statement of comprehensive income as incurred.







The fund has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the fund’s accounting periods beginning on or after 01 March 2013 or later periods:


This new standard was issued as part of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the Standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following are the main changes from IAS 39: Financial assets will be categorised as those


Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All investments are to be subsequently measured at fair value.





IFRS 9 Financial Instruments (continued)



Financial liabilities shall not be reclassified. Investments in equity instruments may

be measured at fair value through other comprehensive income. When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition of the investment. The election may be made per individual investment.


The classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss.





Amended the required disclosures to help users

of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position.


The fund has adopted the amendment for the first time in the 2013 annual financial statements.




The fund expects to adopt the standard for the first time in the 2014 annual financial statements.It is unlikely that the standard will have a material impact on the fund’s annual financial statements.

IAS 32 Amendment to IAS 32 Financial Instruments: Presentation

Offsetting financial assets and financial liabilitiesThe amendment has clarified and expanded the application guide in relation to the offsetting of financial assets and financial liabilities in respect of:• The meaning of ‘currently has a legally enforceable

right of set-off’• The application of simultaneous realisation and

settlement• The offsetting of collateral amounts• The unit of account for applying the set-off

requirementsThe fund has not yet established the impact of the adoption of the amendment.


Require recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements.




IAS 19 Employee Benefits Revised (continued)

Introduce enhanced disclosures about defined benefit plans. Modify accounting for termination benefits, including distinguishing benefits provided in exchange for

service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits.

Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features.

The effective date of the amendment is for years beginning on or after 01 January 2013.The fund expects to adopt the amendment for the first time in the 2014 annual financial statements.

It is unlikely that the amendment will have a material impact on the fund’s annual financial statements.

3. Investment property

2013 2012Cost /

ValuationAccumulateddepreciation

Carryingvalue

Cost /Valuation

Accumulateddepreciation

Carryingvalue

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Investment property 5 961 - 5 961 3 575 - 3 575


Opening balance


N$ ‘000 N$ ‘000 N$ ‘000Investment property 3 575 2 386 5 961


Opening balance


N$ ‘000 N$ ‘000 N$ ‘000Investment property 3 200 375 3 575

Land and buildings comprise Erf 1983 Keetmanshoop (2624 square metres with office building thereon).




4. Property, plant and equipment

2013 2012Cost /

ValuationAccumulateddepreciation

Carryingvalue

Cost /Valuation

Accumulateddepreciation

Carryingvalue

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Land 4 436 - 4 436 4 424 - 4 424Buildings 29 150 (3 038) 26 112 28 622 (2 851) 25 771Furniture and fixtures 2 033 (1 095) 938 1 910 (1 053) 857Motor vehicles 2 514 (991) 1 523 2 477 (899) 1 578Office equipment 2 393 (1 158) 1 235 2 292 (1 112) 1 180Computer equipment 4 885 (2 743) 2 142 4 565 (2 577) 1 988Total

45 411 (9 025) 36 386 44 290 (8 492) 35 798


Additions Adjustments Depreciation Total

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Land 14 (2) - 4 436Buildings 640 (113) (186) 26 112Furniture and fixtures 113 10 (42) 938Motor vehicles 37 - (92) 1 523Office equipment 119 (18) (46) 1 235Computer equipment 342 (22) (166) 2 142

1 265 (145) (532) 36 386


Opening balance

Additions Depreciation Total

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Land 4 154 270 - 4 424Buildings 25 184 801 (214) 25 771Furniture and fixtures 785 114 (42) 857Motor vehicles 1 469 214 (105) 1 578Office equipment 1 082 145 (47) 1 180Computer equipment 1 854 282 (148) 1 988

34 528 1 826 (556) 35 798

Land and buildings comprise Erf 119 Grootfontein (1 329 square metres, registration division f3), Erf 120 Grootfontein (1 377 square metres with buildings thereon), Erf 858 Walvis Bay (1 250 square metres with buildings thereon) Erf 1 589 Oshakati (3 515 square metres without improvements), Erf 2 269 Windhoek(10 092 square metres), Erf 1 959 Otjiwarongo (1 081 square metres) and Erf 1 965 Otjiwarongo (1 310 square metres).




5. Intangible assets

2013 2012

Cost / Valuation

Accumulated amortisation Carrying value Cost /

ValuationAccumulated amortisation

Carrying value

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Software license 1 115 (270) 845 808 (150) 658



N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Software license 658 306 (119) 845



N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000

Software license 482 250 (74) 658


2013 2012N$ ‘000 N$ ‘000

Related fundsMaternity Leave, Sick Leave and Death Benefit Fund 2 527 2 636Social Security Commission 2 384 2 386Accident Pension Fund 3 341 4 408Social Security Commission (2 702) (2 789)Maternity Leave, Sick Leave and Death Benefit Fund (49) (4)Accident Pension Fund (3 410) (4 452)

2 091 2 185


Current assets 8 252 9 430

Current liabilities (6 161) (7 245)

2 091 2 185



7. Investments

2013 2012 N$000 N$ ‘000

Held for trading at fair value through profit or loss

Funds invested with the asset managersFunds held with professional managers are fair valued by professional managers at year end.

442 473 345 541

Held to maturity

Fixed term depositsFixed term deposits are held with the financial institutions.

54 863 71463

Total other financial assets 497336 417004

Current assetsHeld at fair value through profit or loss 442 473 345 541Held to maturity 54 863 71 463

497 336 417 004


Funds held with professional managers are fairly valued by asset managers as at year end.

The fair value of listed or quoted investments are based on quoted market price. The fair values are determined annually

at statement of financial position date.


For financial assets recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs used to make the measurements.


Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices).

Level 3 applies inputs which are not based on observable market data.





2013 2012N$ ‘000 N$ ‘000

Level 1Financial assets held at fair value through profit or loss 442 473 345 541


Trade receivables 42 479 41 387Debtors with credit balance (8 861) (11 515)Provision for bad debts (19 636) (20 579)Other receivables 15 353

13 997 9 646

The fund’s credit period on the assessment income is 30 days. No interest is charged on the trade receivables on the first 30 days from the date of invoicing. Thereafter, interest is charged on the trade receivables at the rate of 10% per annum on the outstanding balance. The fund has the policy of providing for accounts receivable which are outstanding for 12 months or more as potential bad debts.

There is no credit scoring system to assess the potential customer’s credit quality as there is no external credit rating for all the employers in Namibia.

Included in the fund’s trade receivables are debtors with carrying amount of N$ 10 997 000 (2012: N$ 8 584 000) which are past due at the reporting date which the fund has not provided at year end. The fund does not hold collateral over these balances. The average age of these receivables are +120 days (2012:+120 days).





2013 2012N$ ‘000 N$ ‘000

Ageing of past due but not impaired60 days 1 284 33790 days 5 209 1 359Over 120 days 4 504 6 888

10 997 8 584

Movement in the allowance for doubtful debts

Balance beginning of the year 20 579 20 999Amount written off as uncollectible (4 955) -Movement in bad debt during the year 4 012 (420)

19 636 20 579

Ageing of impaired trade receivables

Over 120 days 19 636 20 579



Bank balances 10 347 664


Trade payables 2 563 1 589Accrued leave pay 2 186 2 197Accrued bonus 259 291Unclaimed money 445 493Unknown deposits 78 450Accruals 536 468

6 067 5 488




11. Provisions



N$ ‘000 N$ ‘000 N$ ‘000Legal proceedings 81 - 81Incurred but not reported compensation claims 100 203 1 305 101 508Merit rebates 5 202 1 909 7 111Reported compensation claims - - 2 123

105 486 3214 110 823


Movement Total

N$ ‘000 N$ ‘000Legal proceedings - 81Incurred but not reported compensation claims (3 089) 100 203Merit rebates 5 202 5 202

2 113 105 486

2013 2012N$ ‘000 N$ ‘000

Non-current liabilities 78 053 75 994Current liabilities 32 770 29 492

110 823 105 486

Fair value determination of the IBNR compensation claimsMedical claims 7 534 9 037Permanent disability 2 542 1 973Temporary disability 2 288 1 634Burial and transport expenses 406 357Pension liability 69 583 67 950Claims handling provision 17 878 16 002Data integrity provision 1 277 3 250

101 508 100 203

The unreported incurred claims represent the management estimate as at 28 February 2013 based on actuarial valuation at that date.

The unreported but incurred claims were determined based on basic chain ladder method. The method involves the following:





The runoff claims for the Employees’ Compensation Fund have been grouped into the following subgroups:

i. Burial and transport;ii. Medical claimsiii. Permanent disabilityiv. Temporary disability

Runoff triangles for each of these subgroups were performed by grouping the data by accident year and payment year. Development factors based on the accumulated claims paid after each period in respect of claims from same year of accident were used. These development factors were used to project the expected claims during each future period. By using the chain ladder method, the following assumptions were made:

i. The claims development factors will remain stableii. Past claims experience is a suitable guide to future claims experience

The pension liability is the present value of all future expected pension payments calculated by discounting the

current pension being paid by a net discount rate and allowing for mortality. The following assumptions were made to value the pension liability:

i. Post retirement rate of interest

In order to made some allowance for increasing pensions in the future, the interest rate adopted in the valuation calculations was 3% p.a. in respect of the period after each member’s retirement. The fund does not have a formal pension increase policy, but pensions are increased from time to time on an ad hoc basis.

The effect of this measure is that if in a particular year, for example, the fund earns 10% on its investments then the fund can grant a 6.7% (1.10/1.03-1) increase in pension’s payable from the fund without any financial constraints on it.The corresponding assumption used in the previous valuation report was 3 % p.a. The investment return is assumed to be R186 government bond yield as at 28 February 2013, plus 2.71%.

ii. Mortality

Mortality for those in receipt of pension payments was assumed to be in line with the PA (90) mortality table. Disabled members were assumed to experience higher mortality equal to that for a life aged 15 years older.

Child mortality was ignored until age 18.





iii. Spouse

All disabled pensioners were assumed to have spouse to whom a 50% reversionary pension is paid. Male pensioners were assumed to be four year older than their spouses. The constant allowance pensions were valued based on a single life pension only since these pensions will stop on the death of a disabled person.

iv. Claims handling provision

Part of the expenses that the commission will be paying in future will be related to handling IBNR claims. A claims handling provision equal to 140% of the IBNR liability for the ECF and 75% of the IBNR liability for the MSD fund was set up to cover future expenses. These assumptions changed from those used in the previous valuation of 123% and 95%, while the method used to calculate them remained the same.

The claims handling provision was calculated as the ratio of expenses paid relative to claims paid in 2013 according to the actuarial valuation. We applied this ratio to the IBNR liabilities to arrive at an estimate of the claims handling provision. These assumptions will be used for the next three years and will be updated when the next statutory actuarial valuation is performed.

v. Data integrity provision

The IBNR liability and Pension liability as discussed above depend on the accuracy of the data provided. Since the MSD and ECF data provided does not sizeably differ from the draft financials, we reduced the data integrity provisions for both the MSD and ECF from 25% of IBNR liability used in the previous valuation to 10% of the IBNR liability. This assumption will be monitored and updated when the next statutory actuarial valuation is performed.

12. Revenue

2013 2012N$ ‘000 N$ ‘000

Assessment income 80 494 69 800Assessment interest 2 321 1 944Pension capitalised - Accident Pension Fund 3 292 4 408Assessment penalties 2 399 1 945Administrative fee income - Accident Pension Fund 1 588 1 881

90 094 79 978

13. Claims

Compensation payments 5 557 4 957Medical expenses 6 026 5 146Merit rebates 1 909 5 202Capital pension paid - APF 3 292 2 923Pension paid - APF 6 883 4 502

23 667 22 730





14. Other income

2013 2012N$ ‘000 N$ ‘000

Rental income 159 216Bad debts recovered 3 447 -Other income 1 314 422

4 920 638



Operating lease chargesPremises Contractual amounts 311 251Amortisation on intangible assets 119 75Depreciation on property, plant and equipment 532 556Employee costs 15 710 15681


Investment incomeFunds under asset managers 41768 32 648Fixed deposits 3 704 3 314

45 472 35 962

17. Fair value adjustments

Investment property 2 386 375

18. Cash generated from operations

Profit before taxation 91 517 69 775Adjustments for:Depreciation and amortisation 651 631Investment income (45 472) (35 962)Fair value adjustments (2 386) (375)Movements in provisions 5 337 2 113Changes in working capital:Trade and other receivables (4 351) (1 771)Trade and other payables 579 301

45 875 34 712






The staff members are members of Government Institutions Pension fund (GIPF), a defined benefit fund. The sponsors of the fund are various government related institutions that include the fund and these sponsors have an obligation to meet the shortfall if the fund’s liabilities were to exceed the fund’s assets.


The value of the assets of GIPF is valued by actuaries every third year. The latest valuation was done at at 31 March 2009, and the valuator reported that the fund was in good financial position, and that the present rates of contributions were adequate to enable the fund to provide benefits to which members are entitled. With reported actuarial value of liabilities and reserves of N$ 28.28 billion and assets of N$ 29.941 billion, the funding level at valuation date was 105.9%.

The method used to place value on the past services liabilities and the required future contribution rate is known as the project unit credit method based on actuarial valuations.Based on the data disclosed by the actuarial valuation, the surplus is within acceptable range to prevent a short-fall within the foreseeable future and therefore places no current obligation on the fund to provide for.

The performance of the fund’s investments is benchmarked on a quarterly basis by its investment consultant, Human Employee Benefits fund (Pty) Ltd.

2013 2012N$ ‘000 N$ ‘000


Fees 146 79

21. Other non-cash item

HeadingProperty, plant and equipment adjustments 145 -

22. Commitments

Authorised capital expenditure

Already contracted for but not provided for

Property, plant and equipment 21 607 31 926

This committed expenditure relates to property, plant and equipment and will be financed by retained profits, existing cash resources and funds internally generated.




23. Contingencies

1. This matter in May 2007 a claimant’s leg was amputated. In 2008 he submitted a claim for compensation under the Employees Compensation Act claiming that an injury that he sustained at work on resulted in the amputation of his leg. The Commission paid for the claimant’s prosthesis in the amount of N$ 88 100 Mr. Dumeni then demanded that the Commission provide him with a monthly pension since he is now disabled.



2. Litigation is in the process against the fund relating to a labour matter on unfair dismissal. In this Labour matter, Social Security Commission appealed the DLC’s judgment. The matter was set down for 23 November 2011 to2 December 2011. This matter which was set down for hearing on 20 October 2012, will be postponed because Mr. Mulder does not have a legal representative. Our instructions are that this be a final

postponement for Mr. Mulder and that he bears the costs occasioned by this postponement. Mr. Tjitemisa (The fund’s Legal Representative) was also requested to provide the Commission with a report on the prospects of success in this matter considering the cost expended on this matter to date.

The Court ordered Social Security Commission to reinstate and compensate complainant for his loss of income from 20 May 2005 until his date of reinstatement minus the income he received while in the employ of Trustco Group Holdings Limited.

3. A letter was written to GIPF requesting the GIPF to withdraw Mr. Spanneberg’s pension benefits of N$ 440 471 in favour of the Commission as compensation in terms of section 37 D (b) (ii) (aa). GIPF advised that the benefits cannot be withdrawn in favour of the Social Security Commission. Mr. Marcus was instructed to issue summons in this matter.

4. A legal opinion was obtained in this regard. The further investigations conducted did not yield any positive results as to the filing of an unfair dismissal case that was lodged against the Minister of Labour. Mrs. Onesmus was recently charged due to an investigation by the Anti-Corruption Commission in relation to the misadministration charges that were previously leveled against her through a civil suit which was later settled. In September 2012, Mrs. Onesmus telephonically requested the Commission to complete her pension withdrawal form and was advised that the Commission has no intention of complying with her request. Instead the Commission is considering bringing an application in terms of section 300 (1) of the Criminal Procedure Act 51 of 1977 during her criminal trial. She promised to make a written request to the Commission and was advised that the Commission will then advise her based on her written request.

5. A follow up letter was written to Dr. Weder, Kauta and Kamuhanga Legal Practitioners regarding the Avid case to determine the status of the N$ 3.5 million held in trust by the Trustee of Mr. Josea





the purpose thereof, amongst other issues. A progress report from Dr. Weder, Kauta and Hoveka Legal Practitioners was received and submitted to the Audit and Risk Committee for noting during 22 October 2012 meeting. At the meeting held on 22 November 2012 to discuss the status of the N$ 3.5 million, Social Security Commission was informed that the N$ 3.5 million was paid to Mr. Josea. As per the Attorney General’s advise, the Social Security Commission’s last available option is to wait for the criminal proceedings to commence, and to request the Prosecutor General’s Office to impose a suspensive condition during sentencing to ensure that the Social Security Commission is compensated in the amount owed to the Social Security Commission. Only after having exhausted these options should the line Ministry request Treasury to write off the debt or the balance thereof. The matter is set down for 14 February 2014.

6. The High Court referred this matter for a hearing in terms of section 56 of the ECA. However, Social Security Commission appealed the High Court’s judgment to the Supreme Court. The matter was heard in July 2011 and judgment was reserved. This matter will provide guidance as to how Social Security Commission can deal with cases that are brought outside the prescription period (section 54 cases). The fund is still awaiting judgment in this matter.

7. A legal case against Cheetah Security for failure to register employees with the Social Security Commission. The defendant pleaded guilty and was fined by the Magistrates’ Court.

8. A case involving an employee who defrauded the Commission an amount of N$ 54,431 and was charged for fraud as a result. The fund contacted the prosecutor and was advised that the trial of this matter will be heard de novo (a fresh) because there are parts of the record that are missing.

9. There is a petrol card fraud case of N$ 7,154 under investigation in Walvis Bay. Employees of the Commission are implicated. Further details will be provided as the case progresses.

10. The Namibian police are investigating an alleged death claim fraud case, where the deceased was married to two women and one of the wives claimed his death benefits of N$ 5 000 from Social Security Commission. The first death certificate submitted with the claim indicated that the deceased was single. A subsequent one revealed that the deceased was in fact married. Legal is assisting the investigation officer with the claim documents as fund would be interested to know whether there is any involvement from within Social Security Commission.

11. The fund sued and obtained judgment against Schnugh for defrauding the Commission in the amount of N$ 196 073 in respect of vehicles that were sold at an auction between February and June 2007. Schnugh did not pay the proceeds of the sale of the vehicles to the Commission. Schnugh was ordered to pay N$ 5 000 per month to the Commission. After the letter was written to Hengari, Kangueehi & Kavendji Incorporated, they reported that Schnugh cannot be traced. Hengari et al were advised to provide the latest contact details of the client and lost payments received. A tracing agent was appointed to trace Schnugh.

Thus far the investigation by the tracing agent revealed that Mr. Schnugh is married out of community of property. The agent ascertained that Mr. Schnugh does not own the house in which he is currently living. He is in fact renting the said property. Mr. Schnugh however promised to pay an amount of N$ 1 000 directly into the Bank account of the Social Security Commission by the end of November 2012. No payment has been received to date. Mr. Schnugh promised to make a payment end of January 2013. On 23 January 2013 Mr. Schnugh was advised that Social Security Commission is considering handing the matter back to its lawyers for debt collection purposes. It should however be noted that the risk is that the judgment debtor may still not be in a position to repay the debt, which may result in Social Security Commission incurring extra legal costs in pursuit of collecting the outstanding debt.

12. The fund bought erf 1610 from the Municipality of Keetmanshoop on 28 March 2001 for N$ 24 000. The erf was paid for on 28 March 2001 but there was




24. Related parties

RelationshipsAdministrator Social Security Commission

Related funds

Development FundMaternity Leave, Sick Leave and Death Benefit FundNational Pension Fund National Medical Benefit Fund

Commissioners




Emoluments of N$ 295 000 (2012: N$ 148 000) were paid to the commissioners during the year.


N$ ‘000 N$ ‘000Loan accounts - Owing / (to) by related fundsSocial Security Commission (2 702) (2 789)Maternity Leave, Sick Leave and Death Benefit Fund (49) (4)Accident Pension Fund (70) (44)Social Security Commission 2 384 2 386

Maternity Leave, Sick Leave and Death Benefit Fund 2 527 2 636


no transfer into the fund’s name. During April 2012, the fund brought an application to the High Court to order the Municipality to transfer erf 1610 into the it’s name. The fund is advised that the Municipality has signed the agreement. The fund accepted a settlement of just over N$ 20 000 as wasted costs for the above mentioned application. The property was registered into the name of the Social Security Commission.


24. Related parties

RelationshipsAdministrator Social Security Commission

Related funds

Development FundMaternity Leave, Sick Leave and Death Benefit FundNational Pension Fund National Medical Benefit Fund

Commissioners




Emoluments of N$ 295 000 (2012: N$ 148 000) were paid to the commissioners during the year.

26. Risk management


The primary objective of the investment of Commission’s Fund is to balance the safety needs, liquidity and return objectives of the Fund against the liability structure and the general objectives of each fund.



Real return (i.e. returns in excess of inflation) is required across the range of portfolios, which compensate adequately for the levels of risks inherent in the portfolio. The requirement for real returns shall not apply to the working capital portfolio.


Liquidity risk


The Fund is exposed to daily calls on its available cash resources from claims. Liquidity is the risk that cash may not be available to pay obligations when due at a reasonable cost. The Board sets limits on the minimum proportion of maturity funds available to meet such calls.

The Fund actively manages its cash resources, split between short-term and long- term to ensure sufficient cash is at hand to settle claims liabilities, based on monthly float projections. The Fund has significant liquid resources to cover its obligations.



Held at fair value


Financial assets held to maturity


amortised cost

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Investments - 442 473 54 863 -Trade and other receivables 13 997 - - -Loans to related funds 2 091 - - -Cash and cash equivalents 10 347 - - -Provisions - (101 508) - (9 315)Trade and other payables - - - (6 067)



At 29 February 2012 Loans and receivables

Held at fair value


Financial assets held to maturity


amortised cost

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000Investments - 345 541 71 463 -Trade and other receivables 9 646 - - -Loans to related funds 2 185 - - -Cash and cash equivalents 664 - - -Provisions - (100 203) - (5 283)Trade and other payables - - - (5 488)

Interest rate risk




`

Effect on surplus before taxIncrease / (decrease) of 1% in interest rates 3 796 905


2013 Currentinterest rate

Due in lessthan a year

Due afterone year

N$ ‘000 N$ ‘000Funds held through profit or loss 8.17% 464 545 -Trade and other receivables 10.00% 16 318 -Funds held to maturity 5.50% 57 881 -Loans to other funds -% 2 091 -Cash and cash equivalents 4.50% 10 812 -Provisions -% (32 770) (78 053)Trade and other payables -% (6 067) -`



`


Key areas where the Fund is exposed to credit risk are:- accounts receivables- investments and cash equivalents

Credit risk management Trade and other receivables

The Fund’s maximum exposure to credit risk at the reporting date is the carrying value of financial assets disclosed in notes 7 and 8. The fund does not hold any collateral as security. Receivables are presented net of the provision for impairment losses.


The Fund’s cash and cash equivalents and investments are placed with high credit quality financial institutions. The Fund has a policy of limiting the amount of credit exposure to any one financial institution. The maximum exposure at the reporting date is the carrying value of cash and cash equivalents disclosed in note 9 and the carrying value of investments in note 7. The Fund deposits only with reputable financial institutions and the credit quality of financial assets are therefore good.



Due after one year

N$ ‘000 N$ ‘000Funds at fair value through profit or loss -% 345 541 -Trade and other receivables 10.00% 11 967 -Funds held to maturity 6.43% 71 463 -Loans to other funds -% 2 185 -Cash and cash equivalents -% 664 -Provisions -% (29 492) (75 994)Trade and other payables -% (5 488) -

Credit risk





2013 2012N$ ‘000 N$ ‘000

Financial assetsFunds held through profit or loss 442 473 345 541Funds held to maturity 54 863 71 463Loans to related funds 2 091 2 185Trade and other receivables 13 997 9 646Cash and cash equivalents 10 347 664

523 771 429 499

Financial liabilitiesProvisions 110 823 105 486Trade and other payables 6 067 5 488

116 890 110 974

Market risk



Market risk arises in the Fund due to fluctuations in both the value of liabilities and value of investments held.

Management has established a policy on market risk which sets out principles that the Fund is expected to adopt in respect of management of the key market risks to which the Fund is exposed. The board monitors adherence to this market risk policy and regularly reviews how management is managing these risks through the investment committee and audit and risk committee. For each of the major components of market risk, described in risk management note, the management has put in place additional policies and procedures to set out how risk should be managed and monitored, and the approach to setting an appropriate risk appetite.



Price risk

The Fund is subject to price risk due to the daily changes in the market values of its investments held by asset managers.

The Fund’s objective is to earn competitive relative returns by investing in a diverse portfolio of high-quality, liquid securities. Portfolio characteristics are analysed regularly and equity price risk is actively managed through a variety of modeling methods by asset managers. The fund’s holdings are diversified across industries, and concentration in any one fund or industry is limited by parameters established by asset managers and statutory requirements. The fund’s exposure to movement in equities is 24% for equities on the funds held by asset managers.


At 28 February 2013, the fund’s listed equities were recorded at their fair value of N$ 117.7 million (2012: N$ 104.5 million). A hypothetical 10% decline or increase in each individual share price would decrease/increase the surplus for the year by N$ 11.77 million (2012: N$ 10.45 million).


DeVelopMent FUnDANNUAL FINANCIAL STATEMENTS



DeVelopMent FUnDAnnual Financial Statements for the year ended 28 FEBRUARY 2013

General InformationCountry of incorporation and domicile Namibia


The Development Fund’s principal activity is to contribute to the social and economic development of Namibia. The fund conducts training schemes and employment schemes for the benefit of socio-economically disadvantaged persons. The fund also grants bursaries, loans and other forms of finance to students enrolled at any recognised technical and academic institutions of higher learning. The fund was established under the Social Security Act 34 of 1994.




Registered office Cnr. A. Kloopers & Haupt StreetsKhomasdalWindhoekNamibia




Index Page

Commissioners’ Report 154Statement of Financial Position 155Statement of Comprehensive Income 156Statement of Changes in Equity 156Statement of Cash Flows 157Notes to the Annual Financial Statements 158 - 179


COMMISSIONER’S REPORT


Commissioner’s Report



The Development Fund’s principal activity is to contribute to the social and economic development of Namibia. The fund conducts training schemes and employment schemes for the benefit of socio-economically disadvantaged persons. The fund also grants bursaries, loans and other forms of finance to students enrolled at any recognised technical and academic institutions of higher learning. The fund was established under the Social Security Act 34 of 1994 and operates in Namibia.

Net surplus of the fund was N$ 28 672 000 (2012: N$ 25 325 000).


The commissiners are not aware of any matter or circumstance arising since the end of the financial year.

3. Commissioners’ interests in contracts

The commissioners did not have any interest in contracts entered into by the fund during the year.

4. Commissioners

The commissioners of the fund during the year and to the date of this report are as follows:

NameMr. B R R Kukuri (Chairperson)Mr. E BiwaMs. A ZamueeMs. C U PandeniMr. D WrightMs. E BreuerMs. H KapendaMr. H ShikongoMr. J T //Garoeb

Ms. O M L M Kutenda

5. SecretaryThe secretary of the Commissioner is Emma Kantema-Gaomas:

Business address Cnr. A. Klooppers & J. Haupt StreetsKhomasdalWindhoekNamibia


6. Auditors

Office of the Auditor-General will continue in office in accordance with section 19 of the Social Security Act 34 of 1994.




Notes 2013 2012

N$ ‘000 N$ ‘000

Assets

Non-Current Assets

Property, plant and equipment 3 56 16

Current Assets

Loans to related funds 4 73 49Investments 5 159 981 131 356

160 054 131 405

Total Assets 160 110 131 421


FundsAccumulated surpluses 149 249 127 003

Liabilities

Current LiabilitiesLoans from related funds 4 503 503Trade and other payables 7 7 136 304Provisions 8 3 200 3 200Bank overdraft 6 22 411

10 861 4 418



STATEMENTS COMPREHENSIVE INCOME



Notes 2013 2012N$ ‘000 N$ ‘000

Revenue 9 25 726 29 282Benefits 10 (9 373) (7 656)


Other income 51 -Operating expenses (3 458) (2 298)

Surplus before investment income11 12 946 19 328

Investment income 12 9 300 5 997



Accumulated surpluses

Total surpluses

N$ ‘000 N$ ‘000

Balance at 01 March 2011 101 678 101 678Changes in surplusesTotal comprehensive income for the year 25 325 25 325


Balance at 01 March 2012 127 003 127 003

Changes in surplusesTotal comprehensive income for the year 22 246 22 246






2013 2012

Notes N$ ‘000 N$ ‘000


Cash generated from operations 13 19 780 22 890

Interest income 9 300 5 997

Net cash from operating activities 29 080 28 887


Purchase of property, plant and equipment 3 (42) -

Proceeds from related funds (24) -Acquisistion of investments (28 625) (131 356)


Total cash movement for the year 389 (102 469)

Cash at the beginning of the year (411) 102 058

Total cash at end of the year 6 (22) (411)




1. Accounting Policies


The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Social Security Act 34 of 1994. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Namibia Dollars.




Trade receivables, Held through profit or loss investments and Loans and receivables

The fund assesses its Trade receivables, Held through profit or loss investments and Loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the fund makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for Trade receivables, Held through profit or loss investments and Loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific

economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.


The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the fund is the current bid price.


The 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 fund for similar financial instruments.

Impairment testing





Impairment testing (Continues)

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 8 - Provisions.

Depreciation rates



The cost of an item of property, plant and equipment is recognised as an asset when:it is probable that future economic benefits associated with the item will flow to the fund; and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs 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.



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

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

The useful lives of items of property, plant and

equipment have been assessed as follows:

Item Average useful lifeFurniture and fixtures 10 yearsOffice equipment 10 yearsComputer equipment 5 years

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



Assets which the (company/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. These assets are not accounted for as non-current assets held 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.





Classification

The company classifies financial assets and financial liabilities into the following categories:

• Financial assets at fair value through profit or loss - designated

• Held-to-maturity investment Loans and receivables• Financial liabilities measured at amortised cost







Transaction costs on financial instruments at fair value

through profit or loss are recognised in profit or loss.

Regular way purchases of financial assets are accounted

for at settlement date.


Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the period.

Net gains or losses on the financial instruments at fair value through profit or loss exclude dividends and interest.

Dividend income is recognised in profit or loss as part of other income when the fund’s right to receive payment is established.







In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available- for-sale financial assets, the cumulative loss




Impairment of financial assets (continued)

- measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity as a reclassification adjustment to other comprehensive income and recognised in profit or loss.


Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.


Derecognition



The fair values of quoted investments are based on

current bid prices. If the market for a financial asset is not active (and for unlisted securities), the fund establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Loans to / (from) related funds

These include loans to and from related fund and are recognised initially at fair value plus direct transaction costs.Loans to related funds are classified as loans and receivables.Loans from related funds are classified as financial liabilities measured at amortised cost.







Trade and other receivables (continued)






Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement of an overdraft is recognised over the term of an overdraft in accordance with the fund’s accounting policy for overdraft costs.



Irrespective of whether there is any indication of impairment, the fund also:• tests intangible assets with an indefinite useful

life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount.

• This impairment test is performed during the

annual period and at the same time every period.• tests goodwill acquired in a business combination

for impairment annually.



If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.


Short-term employee benefits







1.5 Employee benefits (continued)



Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.



To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in profit or loss over the expected average remaining service lives of participating employees. Actuarial gains or losses within the corridor are not recognised.

Actuarial gains and losses are recognised in the year in which they arise, in other comprehensive income.

Gains or losses on the curtailment or settlement of a defined benefit plan are recognised when the Fund is demonstrably committed to curtailment or settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In profit or loss, the expense relating to a defined

benefit plan is presented as the net of the amount recognised for a reimbursement.The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduces by the fair value of plan assets.



Provisions are recognised when:

• the fund has a present obligation as a result of a past event;

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• a reliable estimate can be made of the obligation.


Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.




1.6 Provisions and contingencies (continued)

A constructive obligation to restructure arises only when an entity:• has a detailed formal plan for the restructuring,

identifying at least:- the business or part of a business concerned;- the principal locations affected;- the location, function, and approximate number of employees who will be compensated for terminating their services;- 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.

1.7 Government grants

Government grants are recognised when there is reasonable assurance that: the fund will comply with the conditions attaching to them; and the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.

Grants related to income are presented as a credit in the profit or loss (separately).Where a loan is received from government at below market interest rate, the difference between the fair

value of the loan and the amount received is recognised as a government grant.

1.8 Revenue

Revenue from contributions are recognised when the grants or contributions are received and are recognised at fair value of the consideration received.

Investment income

Interest is recognised, in profit or loss, using the effective interest rate method.

Dividends are recognised, in profit or loss, when the fund’s right to receive payment has been established.







The fund has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the fund’s accounting periods beginning on or after 01 March 2013 or later periods:


This new standard was issued as part of a three phase project to replace IAS 39 Financial Instruments:




IFRS 9 Financial Instruments (continued

Recognition and Measurement. To date, the Standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following are the main changes from IAS 39: Financial assets will be categorised as those


Financial assets at amortised cost are those financial assets where the business model for managing the assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All investments are to be subsequently measured at fair value.




Financial liabilities shall not be reclassified. Investments in equity instruments may be measured

at fair value through other comprehensive income. When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition of the investment. The election may be made per individual investment.


The classification categories for financial liabilities remains unchanged. However, where a financial liability is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This

excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss.





Amended the required disclosures to help users of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position.


The company has adopted the amendment for the first time in the 2013 annual financial statements.






IAS 12 Income Taxes: Amendment: Deferred Tax: Recovery of Underlying Assets

Offsetting financial assets and financial liabilities




IAS 12 Income Taxes: Amendment: Deferred Tax: Recovery of Underlying Assets (Continued)

The amendment has clarified and expanded the application guide in relation to the offsetting of financial assets and financial liabilities in respect of:. The meaning of ‘currently has a legally enforceable right of set-off’. The application of simultaneous realisation and settlement. The offsetting of collateral amounts. The unit of account for applying the set-off requirementsThe fund has not yet established the impact of the adoption of the amendment.


Require recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments,

curtailments and settlements Introduce enhanced disclosures about defined

benefit plans Modify accounting for termination benefits,

including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits

Clarification of miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features

The effective date of the amendment is for years beginning on or after 01 January 2013.

The fund expects to adopt the amendment for the first time in the 2014 annual financial statements.

It is unlikely that the amendment will have a material impact on the fund’s annual financial statements


2013 2012 Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation depreciation value Valuation depreciation value

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000

Furniture and fixtures 65 (48) 17 53 (47) 6Office equipment 57 (37) 20 47 (37) 10Computer equipment 21 (2) 19 - - -

Total 143 (87) 56 100 (84) 16

Opening Additions Depreciation Totalbalance

N$ ‘000 N$ ‘000 N$ ‘000 N$ ‘000

Furniture and fixtures 611 -

17Office equipment 10 10 - 20IT equipment - 21 (2) 19

16 42 (2) 56


Opening balance Depreciation Total N$ ‘000 N$ '000 N$ '000

Furniture and fixtures 10 (4) 6 Office equipment 14 (4) 10

24 (8) 16


Related funds 2013 2012

N$ ‘000 N$ '000 Maternity Leave, Sick Leave and Death Benefit Fund 73 49 Social Security Commission (503) (503)

(430) (454)


Current assets 73 49 Current liabilities (503) (503)

(430) (454)



3. property, plant and equipment




5. Investments

2013 2012N$ ‘000 N$ ‘000

At fair value through profit or loss

Fund held with asset managersFunds held with professional managers are fair valued by professional managers at year end.

87 856 -

Available-for-sale

Unlisted shares 19 265 23 11219 265 23 112

Available-for-sale (impairments) (19 265) (23 112)

- -

Held to maturity

Fixed term investmentsFixed term deposits are held with the financial institutions.

72 125 131 356

Loans and receivables

Study loansLoans are repayable on completion of studies. The loans earn interest at 50% of the prime loan rate from the date of issue.

950 201

950 201Loans and receivables (impairments) (950) (201)

- -

Total other financial assets 159 981 131 356

Current assetsAt fair value through profit or loss 87 856 -Held to maturity 72 125 131 356

159 981 131 356


Funds held with professional managers are fairly valued by asset managers as at year end.

The fair value of the financial assets is determined as follows:

The fair value of listed or quoted investments are based on quoted market price.

The fair values are determined annually at statement of financial position date.




5. Investments (continued )

Fair value hierarchy of held to maturity investments



Bank overdraft (22) (411)


Trade payables 6 803 32Accrued leave pay 232 232Accrued bonus 38 37Accruals 19 -Unclaimed monies 44 3

7 136 304

8. Provisions


Opening balance Total

N$ ‘000 N$ ‘000Training scheme 3 200 3 200


Opening balance Total

N$ ‘000 N$ ‘000Training scheme 3 200 3 200

The fund has an agreement in place with the Ministry of Youth, National Service, Sport and Culture (MYNSSC) to fund an employment scheme to the value of N$ 5.7 million of which N$ 2.5 million have been disbursed already in January 2012.

2013 2012N$ ‘000 N$ ‘000

Level 1Fund held with asset managers 87 856 -



2013 2012N$ ‘000 N$ ‘000

9. Revenue

Contributions from Maternity Leave, Sick Leave and Death Benefit Fund 25 726 25 082Government grants - 4 200

25 726 29 282

10. BenefitsStudy schemes 9 267 5 156Development Fund Benefits 106 2 500

9 373 7 656



Depreciation on property, plant and equipment 2 8Employee costs 1 818 1 352


Interest incomeFixed term deposits 5 453 5 997Funds held with professional asset managers 3 847 -

9 300 5 997

13. Cash generated from operations

Profit before taxation 22 246 25 325Adjustments for:Depreciation 2 8Investment income (9 300) (5 997)Changes in working capital:Trade and other receivables - (50)Trade and other payables 6 832 3 604

19 780 22 890


Fees 19 -






15. Retirement benefits Defined benefit plan



The value of the assets of GIPF is valued by actuaries every third year. The latest valuation was done at 31 March 2009, and the valuator reported that the fund

was in good financial position, and that the present rates of contributions were adequate to enable the fund to provide benefits to which members are entitled. With reported actuarial value of liabilities and reserves of N$ 28.28 billion and assets of N$ 29.941 billion, the funding level at valuation date was 105.9%.

The method used to place value on the past services liabilities and the required future contribution rate is known as the project unit credit method based on actuarial valuations. Based on the data disclosed by the actuarial valuation, the surplus is within acceptable range to prevent a short-fall within the foreseeable future and therefore places no current obligation on the fund to provide for.

The performance of the fund’s investments is benchmarked on a quarterly basis by its investment consultant, Human Employee Benefits Company (Pty) Ltd.





N$ ‘000 N$ ‘000Loan accounts - Owing / (to) by related partiesSocial Security Commission (503) (503)Maternity Leave, Sick Leave and Death Benefit Fund 73 49


Contributions paid to (received from) related parties

Maternity Leave, Sick Leave and Death Benefit Fund (25 726) (2 082)

Related funds Employees’ Compensation FundMaternity Leave, Sick Leave and Death Benefit FundNational Pension Fund National Medical Benefit Fund Accident Pension Fund

Commissioners Mr. B R R Kukuri (Chairperson) MR. A E BiwaMs. A Zamuee Ms. C U Pandeni Mr. D Wright Ms. E Breuer Ms. H Kapenda Mr. H ShikongoMr. J T //Garoeb Ms. O M L M Kutenda




17. Risk management Financial risk management

The primary objective of the investment of the commission is to balance the safety needs, liquidity and return objectives of each fund against the liability structure and the general objectives of each fund.



Real return (i.e. returns in excess of inflation) is required across the range of portfolios, which compensate adequately for the levels of risks inherent in the portfolio.

The requirement for real returns shall not apply to the working capital portfolio.


Liquidity risk


The fund is exposed to daily calls on its available cash resources from claims. Liquidity is the risk that cash may not be available to pay obligations when due at a reasonable cost. The board sets limits on the minimum proportion of maturity funds available to meet such calls.

The fund actively manages its cash resources, split between short-term and long- term to ensure sufficient cash is at hand to settle claims liabilities, based on monthly float projections. The fund has significant liquid resources to cover its obligations.





Liquidity risk (continued)

At 28 February 2013Financial liabilities

at amortised cost

Held to maturity

funds

Fair value through

profit and loss

N$ ‘000 N$ ‘000 N$ ‘000Investments - 72 125 87 856Trade and other payables (7 136) - -Loans from related funds (430) - -Provisions (3 200) - -Bank overdraft (22) - -

At 29 February 2012


amortised cost

Held to maturity

funds

N$ ‘000 N$ ‘000Investments - 131 356Trade and other payables (304) -Loans from related funds (454) -Provisions (3 200) -Bank overdraft (411) -

Interest rate risk




Interest rate risk (continued)



2013 2012N$ ‘000 N$ ‘000

Effect on surplus for the yearIncrease / (decrease) of 1 % in interest rates 721 1 309

`



Current Due in less interest rate than a year N$ 1000


2013

Funds held at fair value through profit or loss -% 87 856Funds held to maturity 5.00% 75 789Loans from related funds -% (430)Trade and other payables -% (7 136)Provisions -% (3 200)Bank overdraft -% (22)

Current Due in less2012 interest rate than a year N$ 1000

Funds held to maturity 5.20% 131 356Loans from related funds -% (454)Trade and other payables -% (304)Provisions -% (3 200)Overdraft -% (411)





Credit risk


Key areas where the fund is exposed to credit risk are:- investments and cash equivalents


The fund’s cash and cash equivalents and investments are placed with high credit quality financial institutions. The fund has a policy of limiting the amount of credit exposure to any one financial institution. The maximum exposure at the reporting date is the carrying value of cash and cash equivalents disclosed in note 6 and the carrying value of investments in note 5. The fund deposits only with reputable financial institutions and the credit quality of financial assets are therefore good.



2013 2012N$ ‘000 N$ ‘000

Financial assets

Investments 159 982 131 356

Financial liabilitiesLoans from other funds 430 454Trade and other payables 7 136 304Provisions 3 200 3 200Cash and cash equivalents 22 411

10 788 4 369





Market risk



Market risk arises in the fund due to fluctuations in both the value of liabilities and value of investments held.

Management has established a policy on market risk which sets out principles that the fund is expected to adopt in respect of management of the key market risks to which the fund is exposed. The board monitors adherence to this market risk policy and regulary reviews how management is managing these risks through the investment committee and audit and risk committee. For each of the major components of market risk, described in risk management note, the management has put in place additional policies and procedures to set out how risk should be managed and monitored, and the approach to setting an appropriate risk appetite.

Price risk

The fund is subject to price risk due to the daily changes in the market values of its investments held by asset managers.

The fund’s objective is to earn competitive relative returns by investing in a diverse portfolio of high-quality, liquid securities. Portfolio characteristics are analysed regularly and equity price risk is actively managed through a variety of modeling methods by asset managers. The fund’s holdings are diversified across industries, and concentration in any one company or industry is limited by parameters established by asset managers and statutory requirements. The fund’s exposure to movement in equities is 55%

for domenstic equities on the funds held by assset managers.


At 28 February 2013, the fund’s listed equities were recorded at their fair value of N$ 87.9 million (2012: N$ nil). A hypothetical 10% decline or increase in each individual share price would decrease/increase the surplus for the year by N$ 8.79 million (2012: N$ nil).

18. Contingencies

1. This matter in May 2007 a claimant’s leg was amputated. In 2008 he submitted a claim for compensation under the Employees Compensation Act claiming that an injury that he sustained at work on resulted in the amputation of his leg. The Commission paid for the claimant’s prosthesis in the amount of N$ 88 100. Mr. Dumeni then demanded that the Commission provide him with a monthly pension since he is now disabled.







2. Litigation is in the process against the fund relating to a labour matter on unfair dismissal. In this Labour matter, SSC appealed the DLC’s judgment. The matter was set down for 23 November 2011 to 2 December 2011. This matter which was set down for hearing on 20 October 2012, will be postponed because Mr. Mulder does not have a legal representative. Our instructions are that this be a final postponement for Mr. Mulder and that he bears the costs occasioned by this postponement. Mr. Tjitemisa (The Fund’s Legal Representative) was also requested to provide the Commission with a report on the prospects of success in this matter considering the cost expended on this matter to date.

The Court ordered SSC to reinstate and compensate complainant for his loss of income from 20 May 2005 until his date of reinstatement minus the income he received while in the employ of Trustco Group Holdings.

3. A letter was written to GIPF requesting the GIPF to withdraw Mr. Spanneberg’s pension benefits of N$ 440 471 in favour of the Commission as compensation in terms of section 37 D (b) (ii) (aa). GIPF advised that the benefits cannot be withdrawn in favour of the SSC. Mr. Marcus was instructed to issue summons in this matter.

4. A legal opinion was obtained in this regard. The further investigations conducted did not yield any positive results as to the filing of an unfair dismissal case that was lodged against the Minister of Labour. Mrs. Onesmus was recently charged due to an investigation by the Anti-Corruption Commission in relation to the misadministration charges that were previously leveled against her through a civil suit which was later settled. In September 2012, Mrs. Onesmus telephonically requested the Commission to complete her pension withdrawal form and was advised that the Commission has no intention of complying with her request. Instead the Commission is considering bringing an application in terms of section 300 (1) of the Criminal Procedure Act 51 of 1977 during her criminal trial. She promised to make a written request to the Commission and was advised that the Commission will then advise her based

on her written request.

5. A follow up letter was written to Dr. Weder, Kauta and Kamuhanga Legal Practitioners regarding the Avid case to determine the status of the N$ 3.5 million held in trust by the Trustee of Mr. Josea the purpose thereof, amongst other issues. A progress report from Dr. Weder, Kauta and Hoveka Legal Practitioners was received and submitted to the Audit and Risk Committee for noting during 22 October 2012 meeting. At the meeting held on 22 November 2012 to discuss the status of the N$ 3.5 million, SSC was informed that the N$ 3.5 million was paid to Mr. Josea. As per the Attorney General’s advise, the SSC’s last available option is to wait for the criminal proceedings to commence, and to request the Prosecutor General’s Office to impose a suspensive condition during sentencing to ensure that the SSC is compensated in the amount owed to the SSC. Only after having exhausted these options should the line Ministry request Treasury to write off the debt or the balance thereof. The matter is set down for 14 February 2014.

6. The High Court referred this matter for a hearing in terms of section 56 of the ECA. However, SSC appealed the High Court’s judgment to the Supreme Court. The matter was heard in July 2011 and judgment was reserved. This matter will provide guidance as to how SSC can deal with cases that are brought outside the prescription period (section 54 cases). The fund is still awaiting judgment in this matter.

7. A legal case against Cheetah Security for failure to register employees with the SSC. The defendant pleaded guilty and was fined by the Magistrates’ Court.

8. A case involving an employee who defrauded the Commission an amount of N$ 54 431 and was charged for fraud as a result. The fund contacted the prosecutor and was advised that the trial of this matter will be heard de novo (a fresh) because there are parts of the record that are missing.






10. The Namibian police are investigating an alleged death claim fraud case, where the deceased was married to two women and one of the wives claimed his death benefits of N$ 5 000 from SSC. The first death certificate submitted with the claim indicated that the deceased was single. A subsequent one revealed that the deceased was in fact married. Legal is assisting the investigation officer with the claim documents as fund would be interested to know whether there is any involvement from within SSC.

11. The fund sued and obtained judgment against Schnugh for defrauding the Commission in the amount of N$ 196 073 in respect of vehicles that were sold at an auction between February and June 2007. Schnugh did not pay the proceeds of the sale of the vehicles to the Commission. Schnugh was ordered to pay N$ 5 000 per month to the Commission. After the letter was written to Hengari, Kangueehi & Kavendji Incorporated, they reported that Schnugh cannot be traced. Hengari et al were advised to provide the latest contact details of the client and lost payments received. A tracing agent was appointed to trace Schnugh. Thus far the investigation by the tracing agent revealed that Mr. Schnugh is married out of community of property.

The agent ascertained that Mr. Schnugh does not own the house in which he is currently living. He is in fact renting the said property. Mr. Schnugh however promised to pay an amount of N$ 1 000 directly into the Bank account of the SSC by the end of November 2012. No payment has been received to date. Mr. Schnugh promised to make a payment end of January 2013.

On 23 January 2013. Mr. Schnugh was advised that SSC is considering handing the matter back to its lawyers for debt collection purposes. It should however be noted that the risk is that the judgment debtor may still not be in a position to repay the debt, which may result in SSC incurring extra legal costs in pursuit of collecting the outstanding debt.

12. The fund bought erf 1610 from the Municipality of Keetmanshoop on 28 March 2001 for N$ 24 000. The erf was paid for on 28 March 2001 but there was no transfer into the fund’s name. During April 2012, the fund brought an application to the High Court to order the Municipality to transfer erf 1610 into the it’s name. The fund is advised that the Municipality has signed the agreement. The fund accepted a settlement of just over N$ 20 000 as wasted costs for the abovementioned application. The property was registered into the name of the SSC.


NOTES


www.ssc.org.na

WINDHOEK (HEAD OFFICE)Kloppers Street, Khomasdal

Private Bag 13323, Windhoek, Namibia

Tel: 061 280 7999Fax: 061 280 7999

Annual Report - Social Security Commission Annual Report 2012... · The books of SSC are audited...

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