mpumalanga economic growth agency

PR252/2013 ISBN: 978-G-621-42135-4

e Copyright MEGA Mpumalanga National Growth Agency 2013

Contents

PART A: GENERAL INFORMATION

1. PUBLIC ENTITY'S GENERAL INFORMATION

2. LIST OF ABBREVIATIONS/ACRONYMS

3. CORPORATE PROFILE 3.1. Vision 3.2. Mission 3.3. Core Values 3.4. Objectives

4. LEGISLATIVE AND OTHER MANDATES 4.1 Constitutional mandates 4.2 Legislative Mandates 4.3 Policy mandates

5. ORGANISATIONAL STRUCTURE

6. FOREWORD BY THE CHAIRPERSON

7. CHIEF EXECUTIVE OFFICER'S OVERVIEW

PART 8: PERFORMANCE INFORMATION

3.1. Organisational environment

3.2. Key policy developments and legislative changes

3.3. Strategic Outcome Oriented Goals

4.1 PROGRAMME 1: OFFICE OF THE CEO

4.2 PROGRAMME 2: SPECIAL PROJECTS

4.3 PROGRAMME 3: PROPERTY DEVELOPMENT AND MANAGEMENT

4.4 PROGRAMME 4: DEVELOPMENT FINANCE (BUSINESS DEVELOPMENT)

4.5 PROGRAMME 5: TRADE AND INVESTMENTS

4.6 PROGRAMME 6: FINANCIAL MANAGEMENT

4.7 PROGRAMME 7: CORPORATE SERVICES

5.1. Revenue Collection

5.2. Programme Expenditure

5.3.Capital investment, maintenance and asset management plan

PART C: GOVERNANCE

PART D: HUMAN RESOURCE MANAGEMENT

PART E: FINANCIAL INFORMATION

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GENERAL INFORMATION

MPUMALANGA ECONOMIC GROWTH AGENCY (MEGA)

REGISTRATION NUMBER (if applicable): NIA

PHYSICAL ADDRESS: 2 MC ADAM STREET Cnr ROTHERY & MCADAM STREET NELSPRUIT, 1200

POSTAL ADDRESS: P.O. BOX 1330 NELSPRUIT 1200

TELEPHONE NUMBER/S: 013 755 6328

FAX NUMBER: 088 600 7512

WEBSITE ADDRESS: WWW.MEGA.GOV.ZA

EXTERNAL AUDITORS: AUDITOR GENERAL (SA)

BANKERS: ABSA

COMPANY/ BOARD SECRETARY: Ms P Morgan

ANNEXURE A CONFIRMATION OF ACCURACY AND FAIR PRESENTATION

CONFIRMATON OF THE ACCURACY AND FAIR PRESENTATION OF THE ANNUAL REPORT

TO: Mrs YN PHOSA, MPL MEG: Economic Development, Environment and Tourism DATE: 31 August 2013 CC: The Auditor-General

ANNUAL REPORT FOR THE 2012/2013 FINANCIAL YEAR END

This serves to confinn that the annual report of the Mpumalanga Economic Growth Agency (MEGA) has been submitted to the Auditor-General for auditing in terms section 55(1)(c) of the PFMA

I acknowledge my responsibility for the accuracy of the accounting records and the fair presentation of the financial statements and confirm, to the best of my knowledge and belief, the following:

Annual Financial statements

• The financial statements have been prepared in accordance with GAAP/IAS as prescribed in the National Treasury Framework and relevant guidelines specified I issued by the National Treasury.

• All amounts appearing on the annual report and information in the annual report are consistent with the financial statements submitted to the auditors for audit purposes.

Performance Information

• The performance information fairly reflects the operations, actual outputs against planned targets for performance indicators as per the strategic and annual performance plan of the public entity for the financial year ended 31 March 2013.

• The report on performance information is in accordance with the requirements of the guidelines on the annual report as issued by National Treasury.

• A system of internal controls has been designed to provide reasonable assurance as to the integrity and reliability of performance information.

Human Resource Management

• The human resource information contained in the respective tables in Part D of the annual report, fairly reflects the information of the public entity for the financial year ended 31 March 2013.

General

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

Yours faithfully

~ ~~ ... 4-=-7?· ( Mrilvnakazl ~

Chairperson of the Board

2. LIST OF ABBREVIATIONS/ACRONYMS

AGSA BBBEE

CEO CFO DEDET

EXCO

HR HOD

MEC MEGA

PFMA TR MTEF

SMME

SCM

Auditor General of South Africa Broad Based Black Economic Empowerment

Chief Executive Officer Chief Financial Officer Department of Economic Development and Environment and Tourism Executive Committee

Human Resources Head of Department

Member of Executive Council Mpumalanga Economic Growth AgencY Public Finance Management Act

Treasury Regulations Medium Term Expenditure Framework

Small Medium and Micro Enterprises Supply Chain Management

3. CORPORATE PROFILE

3.1. Vision

"To provide integrated economic growth solutions in support of sustainable development contributing to a better life for all in Mpumalanga Province".

3.2. Mission

"Your partner towards sustainable economic growth".

3.3. Core Values

• Integrity • Accountability • Objective • Team work • Solution oriented • Committed • Client focused • Results focused

3.4. Objectives

The objects of MEGA in terms of the MEGA Act 1 of 201 0 are:

• To provide funding in respect of property development including the granting of housing loans;

• To provide funding in respect of approved enterprise and agricultural development focussing primarily on previously disadvantaged individuals within the Province;

• To Focus on project management, development and management of immovable property; and

• To promote foreign trade and investment so as to ensure enterprise and agricultural development that will significantly contribute to economic growth and development within the Province, with specific emphasis on Black Economic Empowerment.

The objects of the Agency expressly exclude the objects of the Mpumalanga Tourism and Parks Agency, the Mpumalanga Regional Training Trust and the Mpumalanga Gambling Board. In achieving its objectives, the Agency shall endeavour to progressively increase its own revenue generation and collection.

4. LEGISLATIVE AND OTHER MANDATES

4.1 Constitutional mandates

MEGA has been specifically mandated to stimulate growth in various sectors of the provincial economy and therefore provides opportunities to the citizens of Mpumalanga through the funding of projects, promotion of Small, Medium, and Micro Enterprises (SMME's), Cooperatives (Co-ops) and other businesses thereby contributing to the constitutional imperative in Section 22 of the Constitution, which stipulates that citizens have a right to choose their trade, occupation or profession freely while also focusing on economic activity.

4.2 Legislative Mandates

4.2.1 MEGA Act 1 of 2010: Par.3-4

The MEGA Act states that MEGA is established to accomplish the following:

• To provide funding in respect of property development; approved enterprises; housing loans; and agricultural development; focusing primarily on previously disadvantaged individuals within the Province

• To focus on project management and development; and to manage immovable property

• To promote foreign trade and investment so as to ensure enterprise and agricultural development that will significantly contribute to economic growth and development within the Province, with specific emphasis on Black Economic Empowerment

4.2.2 Public Finance Management Act No 1 of 1999

MEGA is listed and registered as a schedule 3(d) entity by virtue of being the successor in title of the previous MEGA established in terms of Act 4 of 2005. Schedule 3 entities are regulated by Sections 47 and 76(4) of the PFMA. In terms of the Act, MEGA has a responsibility to adhere to a number of regulations that ensure the achievement of its objectives such as, real financial growth and sustainability, clean and unqual~f!ed audi~ and improved financial management capability matunty. The regulations in the Act include providing for, inter alia:

• Sound financial management;

• The efficient and effective management of all revenue, expenditure, assets and liabilities of the company; and

• The provision of responsibilities of persons entrusted with financial management in the organisation.

4.2.3 National Credit Act No 34 of 2005

The National Credit Act promotes a fair and nondiscriminatory market place for access to consumer credit and therefore places a responsibility on MEGA, as it provides funding in respect of property development, granting of housing loans and enterprise development focusing on Historically Disadvantaged Individual's within the province to adhere to the regulations in the Act some of which include:

• Promoting fair and non-discriminatory practices in the granting of loans

• Promoting black economic empowerment and ownership in its funded SMMEs and Co-operatives by applying fair credit and credit-marketing practices

• Promoting responsible credit granting by giving loans only to qualifying individuals

• Providing debt re-restructuring and debt counseling services for over-indebted clients (a risk highlighted in programme 4 below)

4. LEGISLATIVE AND OTHER MANDATES CONTINUED

• Establishing policies and standards relating to loans management and housing finance.

• Promoting a consistent enforcement framework relating to debt management.

4.2.4 Financial Intelligence Centre Act No. 38 of 2001

The Finance Intelligence Centre Act's objective Is to establish a Financial Intelligence Centre and a Money Laundering Advisory Council in order to combat money laundering activities and the financing of terrorist and related activities. The Act therefore imposes certain duties on institutions and other persons who might be used for money laundering purposes.

MEGA, through its various programmes, provides finance that facilitates development in the province and therefore recognises that there may be individuals who may circumvent the regulations in the Act. The Act will be applied, as intended, in MEGA's operations.

4.2.5 Housing Act No. 1 07 of 1997

The Housing Act provides for the facilitation of a sustainable housing development process and lays down general principles applicable to housing development. It also defines the functions of national, provincial and local governments in respect of housing and provides for the establishment of a South African Housing Development Board.

The Mpumalanga provincial government has placed the responsibilities outlined in the Act on MEGA. One of MEGA's strategic outcome oriented goals directly addresses this responsibility as it states that It alms -.o increase access to affordable housing•. Programme S's performance delivery objectives will facilitate the achievement of this goal through its Loans Management and Housing Development subprogrammes.

4.2.6 Agriculture Laws Extension Act No. 87 of 1996

The objective of the Act is to provide for the extension of the application of certain laws relating to agricultural matters to certain territories which form part of the national territory of the Republic of South Africa.

MEGA has a programme that is responsible for the growth and development of the agricultural sector by providing financial and non-financial support to farmers and related agriculture businesses. MEGA has to ensure that its operations are in line with the regulations contained in this ACT so as to contribute to the economic development of the province, as mandated.

4.2.7 National Small Business Act No.102 of 1996

The objective of the Act is to provide for the establishment of the National Small Business Council and the Ntsika Enterprise Promotion Agency; and to provide guidelines for organs of state in order to promote small businesses in the Republic.

Enterprise development in the province is to be accelerated through MEGA's promotion initiatives in a number of industries by providing support to Small, Medium and Micro Enterprises (SMME's) and to Cooperatives (Co-ops). MEGA will facilitate the establishment of provincial Small Business Councils as it has a mandate to promote and develop businesses in the province.

The above Acts are legislative mandates that place critical responsibilities on the board, executive and staff of MEGA in terms of how MEGA's operations are conducted. However there are other Acts that regulate MEGA's operations that include, Inter alia,

• Basic Conditions of Employment Act, 1997

• Labour Relations Act no 66 of 1995

• Companies Act of 2008 Act No. 71 of 2008

• Preferential Procurement Policy Framework Act No. 5 of2000


• Employment Equity Act No. 55 of 1998

• Skills Development Act No. 97 of 1998

• Income Tax Act No. 58 of 1962

• Broad-Based Black Economic Empowerment Act No. 53 of 2003

• South African Reserve Bank Act No. 90 of 1989

• Co-operative Banks Act No. 40 of 2007

• Customs and Excise Act No. 91 of 1964.

4.3 Polley mandates

4.3.1 Mpumalanga Economic Growth and Development Path

The Mpumalanga Economic Growth and Development Path (MEGDP) outlines a set of strategic choices and potential paths that will contribute towards growing a sustainable Mpumalanga economy which provides economic opportunities and work for all citizens. The core vision is to build an equitable and inclusive economy that supports an improved quality of life for all the people of Mpumalanga.

The overarching objectives are:

• Increased employment by developing sectors with sustainable labour absorption potential;

• Sustainable economic growth by developing sectors with high growth potential

• Greater equity and a decreased poverty rate (sustainable human development) as more citizens will have access to employment and the benefits of economic growth.

MEGA has developed its strategic plan and policies towards achieving the goals set out in the MEGDP.

4.3.2 Bulk Water & Sanitation Infrastructure

MEGA has been mandated by the provincial government to support the provincial programme to improve bulk water supply and sanitation infrastructure. The Municipalities through CoGTA provided information on their needs to MEGA. This information was validated and the estimated cost to build this infrastructure is R3.476 billion over a three year period.

Due to budget constraints, ten priority projects with the highest impact were identified and work will commence and infrastructure built in eight prioritised Municipalities. The total cost for the ten projects is estimated at R896 million. This infrastructure is vital as it will enable the municipalities to provide water and sanitation services to communities thus improving the quality of life for the citizens of Mpumalanga.

Bulk water and sanitation infrastructure is a new mandate for MEGA and the current strategic plan sets out strategic objectives in programme 2 that will deliver on this mandate.

4.3.3 National Development Plan

The National Development Plan (NDP) is a government-initiated plan to eliminate poverty and reduce inequality by 2030. The plan sketches out the key structural changes required for sustainable social and economic growth.

MEGA's programmes are aligned to meet the aims of the NDP as MEGA's strategic plan is geared to ensure sustainable development and economic growth in the province that will contribute to job creation, poverty alleviation, redressing the inequalities of the past and the beneficiation of the province's resources. This includes the expansion of infrastructure and the improvement and efficient use of rural spaces through the promotion and development of Co-operatives. Co-operatives are autonomous associations of persons who entirely co-operate for their mutual social economic and cultural benefits.


Co-operatives include non-profit community organisations and businesses that are owned and managed by the people who use the services (consumer co-operative) and by people who work there (worker co-operative) or by people who live there (housing cooperative).

4.3.4 National Outcomes

Government has agreed on 12 outcomes as a key focus of work between now and 2014. Each outcome has a limited number of measurable high-impact priority outputs and sub-outputs with targets. In turn, each output is linked to a set of activities that will help achieve the targets and contribute to the outcome. The achievement of these outcomes is dependent on the alignment of all spheres of government thereto.

MEGA has aligned itself to outcomes 4, 7 and 8, namely:

• Outcome 4: Decent employment through inclusive growth

• Outcomes 7: Equitable inclusion of rural communities

• Outcome 8: Sustainable human settlements and improved quality of household life.

MEGA has formulated corresponding strategic objectives through its programmes, to make a meaningful contribution to these government priorities.

4.3.51ndustrial Policy Action Plan (IPAP) 2010/11 to 2012/13

The industrial Policy Action Plan, 'IPAP 2', is a threeyear rolling industrial-related roadmap for the MediumTerm Expenditure Framework (MTEF) period 2010/11 to 2012/13 financial years.

MEGA has placed priority on the development and management of its properties, which include heavy duty and light industrial parks that provide factory space for industries. This is aimed towards helping to build South Africa's industrial base in critical sectors of production and value-added manufacturing, which are labour absorbing industries as provided for in I PAP 2. This will address the decline in industrial and manufacturing capacity and contribute to the reduction of chronic unemployment in line with the MEGDP and IPAP.

4.3.3 Spatial Development Initiatives (SOls)

During the 90's, South Africa adopted an exportorientated focus which necessitated efficient transportation of goods to the coast with the aim of maximizing competitiveness of export products in the global markets. The Maputo Corridor was then conceptualized as one of the spatial development initiatives.

In line with this initiative, MEGA in conjunction with the Department of Trade and Industry (DTI) is involved in the establishment of the Komatipoort Dry Port which has been designated as a special economic zone. The Port will provide an outlet for goods and products to foreign markets for businesses in the province and thereby increase foreign trade.

5. ORGANISATIONAL STRUCTURE

CEO

OFFICE MANAGER

HEAD:

CORPORATE PLANNING

SECRETARY

HEAD: p HEAD: ~ - ~

PROPERTY HEAD:

INTERNAL AUDIT

COMPANY SECRETARY

I ~

I ~

1-

RISK MANAGEMENT

II 1-1 HEAD:

HEAD: CFO CORPORATE

SERVICE

SPECIAL PROJECTS&

SUBSIDIARIES

DEVELOPMENT TRADE & & MANAGEMENT INVESTMENT

ENTERPRISE DEVELOPMENT HOUSING

l HEAD:

AGRICULTURE

''---------- .______ __ ~ '---------- '---------- "----------~ '----------' '----------.___ ___ I

FOREWOR[) BY THE CFIAIRPERSON

INTRODUCTION

The financial year under review has been marked by a number of achievements in terms of the outstanding issues that needed

to be addressed to ensure that. MEGA is in a good position to

effectively deliver on its mandate.

A permanent Board was appointed by the Executive Council with effect from 1 April 2012 for strategic leadership, effective and efficient oversight of the entity's operations towards the achievements of the objectives of the organization.

The appointment of a Chief Executive Officer in December 2012 to provide leadership as well as that of the Chief Financial Officer and the Chief Internal Auditor ensured effective implementation of MEGA' strategic objectives and its programmes. Mr. JS Vilakazi

During the year under review, MEGA received a mandate from government to implement the provision of bulk water infrastructure to eight prioritised Municipalities in the Province. This is in line with MEGA's mandate of delivering on massive infrastructure in Mpumalanga, derived from its Act.

OVERVIEW OF MEGA' STRATEGY AND PERFORMANCE

MEGA continued to implement its long and short term strategies as per its five-year Strategic Plan for the fiscal years 2011 to 2015 and through the Annual Performance Plan for 2012/13.

While the Agency has performed in certain areas, there have been significant challenges facing MEGA such as including but not limited to, low income streams to pursue its mandate, weaknesses in internal controls, inappropriate business operating models, lack of integration of the three merged entities and their systems, governance challenges and organizational structure that is not suited to the strategy and achievement of most of Its objectives. This has resulted in under performance in key performance areas of Its core businesses, such as the provision of finance for housing loans, enterprise and agricultural development to the extent that no new loans were approved during the year under review. However, these challenges have and continue to receive attention through the organisational change and turn-around intervention being rolled out together with independent external experts.

With regard to the Bulk Water Infrastructure project, the Municipalities have signed Service Level Agreements where they have agreed on the priority projects and committed their 3 year MTEF infrastructure budgets for the implementation of the project. These SLA's were submitted to DBSA and other financial institutions as part of the funding applications.

GIC

A number of strategic partnerships were established and maintained for cooperation in areas such as enterprise development, agricultural development, housing and property development. Engagements were made with the following strategic partners during the year under review:

Small Enterprise Finance Agency (SEFA) - possible partnering on loans for enterprise development;

• ABSA and Standard Bank- possible partnering on financing the Comprehensive

• Rural Development Plan (CROP) Projects

• Industrial Development Corporation (IDC) - partnering on the maintenance and refurbishment of MEGA's properties, including the industrial park (Ekandustria) and small industrial parks.

Small Entrepreneur Development Agency (SEDA) and South African Bureau of Standards (SABS) -partnering on product quality and standards as well as certification for MEGA's clients.

MEGA recognises the importance of strategic partnerships and shall continue engagements with its strategic partners and other stakeholders to ensure synergies amongst all role players within the sector.

CHALLENGES FACED BY THE BOARD

As mentioned eartier in the report, some of the main challenges during the year under review related to limited funding to pursue MEGA's mandate, some weaknesses in internal controls, inappropriate business operating models, lack of integration of the three merged entities and their systems, governance challenges and organizational structure that was not suited to the strategy.

The implementation of the tum-around strategy initiated by the Board will bring about the desired turn-around of the entity and make it to be more effective in the achievement of its strategic objectives. The primary focus is to ensure that MEGA meets its targets based on the identified programmes that are aligned to its mandate.

THE YEAR AHEAD

The year ahead will see MEGA entering a new era as the results of the implementation of the turn-around strategy and other efforts made by all stakeholders become realised. A renewed focus on key milestones that are critical to the success of the Agency will place priority on the following:

• Formal agreements with identified MEGA' strategic partners;

• Finalisation of the operating model and organisational structure;

• Placement of staff into permanent positions based on the approved structure, results of the skills assessment and migration strategy.

• Appointment of the Programme Manager to manage and oversee the implementation of the Bulk Water Infrastructure project;

Conclude funding requirements for the implementation of the Bulk Water Infrastructure project

The Board Is confident that in the year ahead MEGA will be In a position to effectively implement its strategic objectives and thus improve performance in its core business.

AC DGE TSl ECIATION

On behalf of the Board, I wish to extend my sincere appreciation to the former MEC of the Department of Economic Development, Environment and Tourism, Honourable Mr NM Mokoena, for his guidance, supt:)ort and leadership during the greater part of the reporting period as well as the current MEC, Honourable Ms YN Phosa for taking over the baton from the former MEC and run with it for the remaining period of the financial year under review.

I want to thank members of the Board for their commitment and stewardship In providing strategic leadership and oversight to management.

The role of the CEO, his management and staff during this challenging process cannot be left unnoticed.

~~ MrSJVilakazi <s= Chairperson of the Board

CHIEF EXECUTIVE OFFICER•s 6VERMIEW

The completion of the merger process in the year under review has ensured that MEGA positions itself as a strategic entity to drive economic development, deliver high impact infrastructure programmes and serve as a catalyst for the facilitation of trade and foreign direct investment.

MEGA has made significant progress In addressing weaknesses in internal controls and other challenges that were brought about by the merging of the three entitles.

The following outstanding issues were resolved during the year under review:

Verification of all assets was conducted and valuation of Immovable assets was completed In December 2012. Impairment of movables has also been finalised and a final asset register with fair values and carrying amounts in terms of GAAP and lAS is in place. Adv. B Mkhize

Chief Executive Officer

• A risk register for 2012 was developed and monitored by outsourced service provider as approved by Audit Committee.

• A three (3) year Audit plan has been developed and approved by the Audit Committee

• Various HR and other financial policies have been reviewed and new policies developed for Board approval and implementation.

• A new organisation structure in line with mandate of the new merged entity was developed.

• The Turnaround Strategy is being implemented to improve audit outcomes and operational efficiencies

MEGA has revised its five-year Strategic Plan in line with its new mandate and to address the instability in its operations and create a solid base for stabilizing the institution while focusing on its mandate within the greater strategic thrust of the provincial and national plans.

At 31 March 2013, the entity had retained income of R 1 491 151 219 and that the entity's total assets exceed its liabilities by R1 549 426 276. Total revenues over the period under review increased by 25% from R259 692105 in 2012 to R324 217 407 in 2013. The revenue includes government grants of R170,031,943 in 2013 and R129, 147,368 in 2012. In the year under review the entity posted a comprehensive loss for the year of R63 234 970 compared to profit of R690 516 886in 2012. The profit in 2012 was atb'lbutable mainly to the fair value adjustments for property of which some portion has been reversed In 2013 as a result of the revaluation exercise the entity undertook to revalue all of its moveable and immoveable assets.

Given a number of corrective measures, MEGA has progressed from a disclaimer of opinion in the 2012 financial year to a qualified opinion in 2013. Although this is not ideal still, it however reflects a clear intention to reverse the challenges of weak internal controls. To this end, we appreciate the guidance and support provided by the AuditorGeneral and wish to assure our readers of our sustained Intentions and efforts to progress into a dean audit In 2014.

It is imperative that MEGA should now re-position itself following the merger, through are-branding process which will help enhance its market position and brand image.

A heartfelt thanks to the Board for its support to management and the guidance provided to the executives during the year under review. Also, my sincere appreciation, to my colleagues in management and staff, for their dedication and support towards achievements of the Agency's performance objectives.

PART PERFORMANCE INFORMATION

1. STATEMENT OF RESPONSIBILITY FOR PERFORMANCE

INFORMATION

The Chief Executive Officer is responsible for the preparation of the public entity's performance information and for the judgements made in this information.

The Chief Executive Officer is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of performance information.

In my opinion, the performance information fairly reflects the actual achievements against planned objectives, indicators and targets as per the strategic and annual performance plan of the public entity for the financial year ended 31 March 2013.

The Mpumalanga Economic Growth Agency's performance information for the year ended 31 March 2013 have been examined by the external auditors and their report is presented on page 85.

The performance information of the entity set out on page 21 to page 61 was approved by the board.

e Officer

2. AUDITOR•s REPORT: PREDETERMINED OBJECTIVES

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

Refer to page 85 of the Report of the Auditors Report, published as Part E: Financial Information.

3. OVERVIEW OF PUBLIC ENTITY•s PERFORMANCE

3.1. Organisational environment

The merger of the three entities brought challenges to the new MEGA as it repositioned itself as the entity mandated to drive growth in the provincial economy. The areas mostly affected are personnel and assets. Assets are MEGA's main stream source of revenue to fund its operations and service its liabilities. Asset maintenance remains a priority and the poor maintenance of properties has resulted in income streams being below expected levels causing the organisation to perform sub-optimally. This has affected key performance areas such as providing finance for housing loans, enterprise and agricultural development to the extent that no new loans were approved during the year under review.

Given the above significant challenges facing MEGA including but not limited to, limited funding to pursue its mandate, weaknesses in internal controls, inappropriate business operating models, lack of integration of the three merged entities and their systems, governance challenges and organizational structure that is not suited to the strategy, MEGA appointed a consulting firm to manage a turn-around strategy in order to position MEGA as an efficient and effective entity.

The appointment of a permanent board has stabilised the organisation as the board has been able to provide strategic leadership and oversight. The appointment of a new CEO with effect from 1 December 2012 and soon that of executive personnel will complete the process of placement thereby providing the leadership that MEGA needs to implement effectively its strategic objectives and its programmes.

A skills assessment exercise was conducted on all employees and the results are currently being processed. A draft operating model and high level organisational structure have been developed and will be finalised by the end of June 2013.

3.2. Key policy developments and legislative changes

MEGA received a mandate from government to manage the implementation of the Bulk Water Infrastructure Project on behalf of the 8 identified priority municipalities within Mpumalanga. Consequently, a memorandum of understanding between the Provincial Government, MEGA and Municipalities was signed on the 3rd October 2012, to establish the partnership and define roles for the various entities in the implementation of this project.

The Municipalities have signed Service Level Agreements where they have agreed on the priority projects and committed their 3 year MTEF infrastructure budgets for the implementation of the water projects. These SLA's were submitted to DBSA and other financial institutions as part of the funding applications.

3. OVERVIEW OF PUBLIC ENTITY•s PERFORMANCE CONTINUED

3.3 Strategic Outcome Oriented Goals

The goals of MEGA have been fonnulated in line with its legislative, policy and other mandates and they drive institutional performance. The seven strategic outcome oriented goals and goal statements which direct the institution are:

Strategic outcome oriented goal1

Goal statement

Strategic outcome oriented goal 2

Goal statement

Strategic outcome oriented goal 3

Goal statement

To achieve institutional excellence as a model economic development agency.

To achieve institutional excellence by creating an organisation that has clearly defined functions, roles and responsibilities and one that is responsive to the changing needs of the organisation to enable it to deliver on its set outcomes for the period 2012 to 2016 with defined service levels

To facilitate the development of socio-economic Infrastructure supporting essential service delivery and eoonomlc development

To facilitate delivery of socio-economic infrastructure that enables effective service delivery by the eight targeted municipalities in the province contributing to Mpumalanga's economic development during the period of this strategic plan.

To achieve real financial growth and sustainablllty

To strengthen financial and related systems and processes that will ensure that MEGA strengthens its financial position to facilitate growth that is in excess of inflation and thereby ensure sustainability by March 2018 through establishing the following systems that measure real financial growth and MEGA's sustainability:

• Design internal business units into profit centres • Determine the turn-around strategy for the profit centres (Agri

businesses, Mines, Industrial Parks and Commercial Shopping Centres)

• Determine viability • Determine projections to the break-even points • Funding model for each profit centre • Track the return on investments.

3. OVERVIEW OF PUBLIC ENTITY•s PERFORMANCE CONTINUED

Strategic outcome oriented goal 4 To promote and grow foreign and domestic trade and investment

To promote and grow by 10% • Foreign and domestic trade by increasing the number of local

traders and producers having access to additional local and foreign Goal statement markets

• The number of investors setting up businesses in the province using the province's resources to provide goods and services and thereby reducing unemployment

Strategic outcome oriented goal 5 To increase access to affordable housing

To increase on a yearly basis from 2013: • The number of serviced plots

Goal statement • The number of houses constructed • Amounts disbursed in loans to clients to access affordable housing

The Municipal land made available for affordable housing.

Strategic outcome oriented goal 6 To promote the development and sustainability of existing and emerging enterprises

To promote the development and sustainability of approved enterprises in the province by ensuring that existing and new enterprises are supported and measured by:

Goal statement • The increase in the number of Small and Medium and Micro • Enterprises (SMMEs) in the province compared to the previous year • The number of SMMEs being given financial and non-financial

support compared to the previous year.

Strategic outcome oriented goal 7 To develop and manage immovable property

Property development and management to be enhanced. This includes bringing onto MEGA's property portfolio by March 2013 all properties in the province that MEGA has been allocated to manage. The following will be done:

Goal statement • Completing and the updating the fixed asset register of immovable

property • Renovating and repairing buildings in line with the assessment of

the maintenance plan • Negotiate market related rentals for entire property portfolio • Establishing a comprehensive property management system.

4.1 PERFORMANCE INFORMATION: PROGRAMME 1

4.1 PROGRAMME 1: OFFICE OF THE CEO

Purpose: To provide strategic direction and organisational leadership to the organisation

Highlights I progress made:

• Quarterly Performance Reports were submitted to the Executive Authority

• Quarterly Internal Audit assessments were conducted

• Risk assessments were conducted quarterly together with mitigating factors

• PFMA Compliance Checklists were completed quarterly and submitted to the Executive Authority.

Activities on the implementation of the Agreements with MEGA's strategic partners, such as SEFA and IDC were carried out.

Quarter1 Quarter 2 Quarter 3 Quarter 4

Strategy to overcome areas of under performance

1. Failure to review and implement Business Processes

[]Total Number of Targets

• Num bar of Targets Achieved

D Number of Targets Partially Achieved

• Number of Targets Not Achieved

D Not Planned for the Quarter

A consulting firm was appointed for the development of a Turn- around Strategy which has 9 work-streams to address all of the areas where there was under performance.

2. Failure to achieve 10% growth in revenue

MEGA's business redesigning to ensure growth in revenue is part of the MEGA's Turn-around Strategy. A consulting firm was appointed for the development of a Turn- around Strategy which has 9 work-streams to address all of these areas.

Changes to planned targets

There were no changes in performance indicators during the year.

Strategic objectives, planned targets and actual achievements Programme/ ~ramme:

Deviation from

Actual Achievement planned target to

Strategic ObJectives 201112012 Planned Target 201212013 Actual Achievement 201212013 Actual Comment on deviations Achievement for

201212013

To provide integrated Submit consolidated strategic Submit 1 consolidated strategic 1 consolidated strategic and 1 annual None None business planning and and annual performance plan and 1 annual performance plan performance plan submitted reporting support

Provide consolidated Provide 4 consolidated 4 consolidated performance reports None None 1 performance reports reflecting performance reports reflecting reflecting actual performance against actual performance against actual performance against targets set on a quarterly basis targets set on a quarterly basis targets set on a quarterly basis provided

2 To provide internal Conduct internal audit Conduct 4 internal audit 4 internal audit assessments per None None auditing services assessments per annum assessments per annum annum conducted

3 To provide risk Conduct risk assessments per Conduct 4 risk assessments per 4 risk assessments per annum None None management services annum (based on risk register) annum (based on risk register) (based on risk register) conducted

4 To provide compliance Not achieved Conduct 4 compliance 4 compliance assurance None None assurance support assurance assessments per assessments per annum conducted

annum

5 To review business Not Planned Review 4 business processes: 0 4 Business Processes could not be implemented by processes to improve loan granting, revenue management since it formed part of work being undertaken efficiencies generation, administrative and by a consulting company as part of the MEGA's Turn-

infrastructure. around Strategy

6 Obtain optimal return Not Planned Obtain 1 0% year on year 25% -15% deviation Positive deviation on investment growth in revenue

7 Establish and maintain Not Planned Establish 5 partnerships for 4 partnerships for Enterprise 1 Engagements with Funding Institutions commenced with strategic partnerships Enterprise Development, Development, Agricultural certain commitments being made but not finalized.

Agricultural Development, Development, Housing and Property SEFA committed to work with MEGA on loans for enterprise Housing and Property Development established development and ABSA and Standard Bank on financing Development the CROP Projects, although there are no written

agreements to this effect as yet.

8 Review the current Not Planned Participate in the reviewing of Participated in the reviewing of the None None provincial Growth Path the current Growth Path with current Growth Path with the DEDET.

the DEDET.

Key performance indicators, planned targets and actual achievements

Programme I Sub-programme:

Baseline I Actual Planned Target

Actual Deviation from planned Performance Indicator Achievement

201212013 Achievement target to Actual Comment on deviations

201112012 2012/2013 Achievement for 2012/2013

1 Number of consolidated strategic and Annual Performance Plans submitted 1 1 1 None None

2 Number of consolidated performance reports reflecting actual performance against 4 4 4 None None target

3 Number of Internal audit assessments conducted 4 4 4 None None

4 Number of Risk assessments conducted 4 4 4 None None

5 Number of Compliance Assurance assessments conducted Not achieved 4 4 None None

Number Business processes reviewed and implemented to improve internal Business Processes could not be

efficiencies: implemented by management since it

6 - Loan granting process reviewed and implemented Not Planned 4 0 4 formed part of work being undertaken - Revenue generation processes and procedures reviewed and implemented

by a consulting company as part of the - Administrative processes and procedures reviewed and implemented

MEGA's Tum-around Strategy - Infrastructure business process packaging reviewed and implemented

7 Percentage year on year growth achieved in revenue Not Planned 10% 25% -15 Positive deviation

Engagements with Funding Institutions

Number of strategic partnerships established and maintained (SABS, Rural Housing commenced with certain commitments being made but not finalized.

Loans Fund, ABSA, IDC and SEFA): SEFA committed to work with MEGA

8 - Enterprise development Not Planned 5 4 1 on loans for enterprise development

- Agricultural Development and ABSA and Standard Bank on - Housing financing the CROP Projects, although - Property development there are no written agreements to this effect.

9 Number of participations in the Growth Path review Not Planned 1 1 None None

Linking performance with budgets

201212013 2011/2012

Sub- Programme Name Budget Actual Expenditure (Over)JUnder Expenditure Budget Actual Expenditure (Over)/Under Expenditure

OFFICE OF THE CEO R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 5,141 3,467 1,674 7,874 6,555 1,319


4.2 PROGRAMME 2: SPECIAL PROJECTS

Purpose: Optimise the execution of multidisciplinary proJects Highlights I progress made:

4.2.1. Bulk Water and Sanitation - MEGA was mandated by the Provincial Government to facilitate the implementation of bulk water infrastructure in prioritized Municipalities as an implementing agent. The project involves the sourcing of the required funding and the project implementation.

The following Local Municipalities were identified:

• Mbombela

• Thembisile Hani

• Mkhondo

• Dr JS Moroka

• Bushbuckridge

• Nkomazi

• Emalahleni

• Albert Luthuli

Progress

• Memorandum of Understanding were signed between the relevant Municipalities, Provincial Government and MEGA regulating the appointment of MEGA as implementing agent for the Municipalities.

• All the projects have been validated and cost estimates determined.

• All the Municipalities have signed Service Level Agreements with MEGA where they have agreed on the identified projects and committed to transfer the required funding from their three year MTEF grant allocations or any other funding sources to MEGA for the implementation of the projects.

• Council Resolutions in this regard were obtained from all the Municipalities.

• MEGA called for proposals from Professional Service providers to do the overall programme management of the project. The tenders were evaluated in terms of the Supply Chain Management processes and a recommendation was made to the Adjudication Committee for approval. This process will be finalized after year-end.

• A further request for Proposals was made for the appointment of a service provider to assist MEGA in building internal capacity and to set up a Project Management Unit within the organization. This appointment will be finalized after year-end.

4.2 PERFORMANCE INFORMATION: PROGRAMME 2 CONTINUED

4.2.2 Facilitation of the Water Bottling Plant

MEGA is only responsible for the commersialisation of the products.

Progress

• A draft marketing and implementation plan has been developed.

• The branding, logo and marketing material have been developed and approved by the co-op.

• The construction of the building is 85% complete.

• The business plan is being reviewed

4

3.5 3

2.5 2

1.5 1

0.5 0

Quarter 1 Quarter2 Quarter3 Quarter4


DTotal Number of Targets

• Number of Targets Achieved




The three areas of non-achievement are: (1) The Dry Port project; (2) The Water Bottling project; (3) The Food Technology project.

MEGA is only playing a supporting role to Department of Economic Development Environment and Tourism on the implementation of these projects. All the projects are being delayed due to processes outside of MEGA's control. MEGA will continue to support the Department to resolve the challenges.



Strategic objectives, planned targets and actual achievements


Deviation from planned targat to Strategic ObJectives Actual Achievement 201112012 Planned Target 201212013 Actual Achievement 201212013 Actual Achievement tor Comment on deviation•

2012/2013

1 To facilitate the Not Planned Submit 1 consolidated strategic and 0 1 There has been no activity from implementation of strategic 1 annual perfonnance plan MEGA as this project has been projects. taken up into the SEZ programme

ofDTI.

Not Planned Provide Bulk water and sanitation Bulk water and sanitation 0 None infrastructure in prioritised areas of infrastructure provided in prioritised the Province areas of the Province

Not Planned Number of water bottling plants 0 1 Deviations due to the following: supported: • Delays in finalising the Water Bottling plant in Donkerhoek construction that is driven and

managed by DEDET and PWRT.

The lack of the committed funding from Department of Rural Development.

Not Planned Number of Food Technology 0 1 Deviations due to the following: Centres supported: • Lack of funding. Food Technology Centre in • Uncertainty of the availability of Mbombela the identified land.


Programme I Sul>programme:

Baseline I Actual Actual Achievement Deviation from planned

Performance Indicator Achievement 2011/2012

Planned Target 201212013 201212013

target to Actual Comment on deviations Achievement for 201212013

1 Number of dry port projects supported: Komatipoort Not Planned 1 0 1 There has been no activity from Dry Port MEGA as this project has been

taken up into the SEZ programme ofDTI.

2 Number of infrastructure projects provided: Not Planned 1 0 0 None Bulk water infrastructure in prioritised areas of the Province

3 Number of water bottling plants supported: Water Not Planned 1 0 1 Deviations due to the following: Bottling plant in Donkerhoek Delays in finalising the

construction that is driven and • managed by DEDET and PWRT.

Lack of committed funding

. 4 Number of Food Technology Centres supported: Food Not Planned 1 0 1 Deviations due to the following:

Technology Centre in Mbombela Lack of funding. Uncertainty on the availability of

• the identified land .. .


201212013 2011/2012

Sub- Programme Name Budget Actual Expenditure (Over)/Under Expenditure Budget Actual Expenditure (Over)/Under Expenditure

SPECIAL PROJECTS R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 3,370 1,505 1,865 552 294 258


4.3 PROGRAMME 3: PROPERTY DEVELOPMENT AND MANAGEMENT

Purpose: To ensure financial leveraged integrated infrastructure planning and development

Highlights I progress made

• Most targets planned were partially achieved.

• 85% occupancy rate for residential properties planned but 80% achieved.

• 90% occupancy rate for industrial/ commercial properties planned but 85% achieved.

• R36m rental income planned but R 25.7 m rental income achieved.

Quarter 1 Quarter 2 Quarter 3 Quarter 4


1. New business turn-around strategy is in place.


• Number ofTargets Achieved


• Number ofTargets Not Achieved


2. Introduction of tenant management systems as part of the turn-around strategy

3. Project to be instituted to effect maintenance on properties and attract new tenants.

4. Major overhaul of the property division to also manage lease agreements and escalations of rentals.

5. Debt collection strategy developed and a system to manage debtors on a proactive basis established

6. Maintenance to be prioritised in the next financial year.





Deviation from planned target to Strategic Objectives Actual Achievement 2011/2012 Planned Target 201212013 Actual Achievement 201212013 Actual Achievement for Comment on deviations

201212013

1 To ensure sound Not Planned Feasibility study and planning (to be 0 1 Capacity in terms of leadership infrastruclure project determined by government planning priorities)

2 To ensure sound project 65 houses construcled in secunda To plan the construction of 100 0 100 Project put on hold due to lack of management houses in Mashishing funding for the project

3 To ensure real estate 25% occupancy rate for Achieve 85% occupancy rate for 80% occupancy rate for residential 5% Illegal occupants and lack of follow management residential properties achieved residential properties properties achieved up to update tenancy

arrangements. To be resolved in the new financial year.

85% occupancy rate for industrial Achieve 90% occupancy rate for 85% occupancy rate for industrial/ 5% Due to economic slowdown, I commercial properties achieved industrial/ commercial properties commercial properties achieved industries are closing down

1 00% of fixed assets accounted Account for 1 00% of fixed assets 1 00% of fixed assets accounted for None None for

90% of fixed asset values verified Verify 1 00% of fixed asset values 1 00% of fixed asset values None None verified

1 00% of actual rental income Achieve 95% of actual rental 82% of actual rental income versus 13% Poor Debt collection process and versus budgeted rental income income versus budgeted rental budgeted rental income achieved system achieved income

Not achieved Meet 1 00% of planned asset 8.9% of planned asset 91.1% Budget constraints maintenance targets maintenance targets met



Baseline I Actual Actual Achievement Deviation from planned Performance Indicator

Achievement 2011/2012 Planned Target 2012/2013

201212013 target to Actual Comment on deviations

Achievement for 2012/2013

1 Number of feasibility studies and planning for industrial Not achieved 1 0 1 Capacity in terms of leadership parks completed

2 Number of houses constructed Not achieved 100 0 100 Project put on hold due to lack of funding for the project

3 (%)Occupancy rate for residential properties achieved Not achieved 85% 80% 5% Lack of active tenant management and systems for rental

management

4 (%)Occupancy rate for industrial/ commercial Not achieved 90% 85% 5% State of disrepair of the factories properties achieved on 240 properties and lack of active marketing of the

rental space

5 (%)Fixed assets accounted for Not achieved 100% 100% None None

6 (%) Fixed assets values verified Not achieved 100% 100% None None

7 (%)Budgeted rental income versus actual rental Not achieved 95% 82% 13% Poor management of debtors and income of R38m (R36m) (R25.7m) inadequate collection systems

8 (%) Planned asset maintenance targets met Not achieved 100% 8.9% 91.1% Budget constraints (R12m) (R12m) (R1,07m)


201212013 2011/2012


PROPERTY DEVELOPMENT AND R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO MANAGEMENT

TOTAL 54,866 83,104 (28,438) 67,528 80,519 7,007


4.4 PROGRAMME 4: DEVELOPMENT FINANCE (BUSINESS DEVELOPMENT)

Purpose: Set strategies for the provision of development funds to selective market segments


This Programme did not achieve a substantial number of targets set for the quarter, mainly due to financial constraints. The following targets were partially achieved:

• 2 CROP detergent manufacturing projects as opposed to 3

• R 5.1 m repayments on housing loans as opposed to R 4.2 m planned

• R 1.9 m repayments on SMME loans as opposed to R 1.5 m planned.

40~~------------------------~

35 30 25 20 15 10 5 0



CTotal Number of Targets

• Number ofTargets Achieved


• Number ofTargets Not Achieved

D Targets Not Planned for the Quarter

A proper cash injection is required in order to be able to address the needs of the province adequately.

MEGA also has in-house tasks of ensuring that its balance sheet is attractive to funders by improving its debt collection, either by outsourcing the debt collection function or by selling the current non-performing loan book to the highest bidder. This will make MEGA liquid and attractive to wholesale funders to raise the necessary capital for all of its projects.





Deviation from planned target to Strategic Objectives Actual Achievement 2011/2012 Planned Target 2012/2013 Actual Achievement 2012/2013 Actual Achievement for Comment on deviations

201212013

1 To provide loan financing to Provide 18 home loans to the Provide 1 0 home loans to the value 0 10 Cash flow constraints resulting in viable SMME projects value of R7,2 million of R10 million moratorium being placed on

issuing of new loans ..

Provide 36 agricultural loans to Provide 16 agricultural loans to the 0 16 Cash flow constraints resulting in the value of R20,5 million value of R8 million moratorium being placed on

issuing of new loans.

Not planned Provide MAFISA loans to the value 0 R22million Loan facility was withdrawn due to of R22 million (including projects) MEGA's non compliance with loan

conditions. This will be resolved in the new financial year.

Provide 28 business loans to the Provide 12 business loans to the 0 12 Provide 12 business loans to the value of R20,6 million value of R8 million value of R8 million

4 To provide equity financing Not achieved Finance 1 BEE project 0 1 Cash flow constraints

5 To provide business Not planned Operationalise 11 SMME projects: 2 bakeries are operational at Albert 3 Deviation due to the following: consulting services - 5 Bakeries ( Albert Luthuli x 2; Luthuli. - Electricity upgrade required.

Thembisile Hani; Bushbuckridge; - Renovations for premises Dr JS Moroka) underway.

- 3 Paint making projects (Albert 1 Paint making accommodation 2 Lack of suitable business Luthuli; Nkomazi; Mkhondo)

- 3 Detergent manufacturing finalized at Nkomazi accommodation

(Albert Luthuli; Nkomazi and 2 sets of detergent making 1 Deviation due to the following: Mkhondo) equipment installed at Albert - Lack of suitable business

Luthuli and Mkhondo accommodation at Chief Albert Luthuli.

- Nkomazi require renovations.

Create 326 development job Create 21 0 development job 0 210 No new loans have been issued opportunities opportunities due to financial constraints


Deviation from planned target to Strategic ObJectives Actual Achievement 201112012 Planned Target 201212013 Actual Achievement 201212013 Actual Achievement for Comment on deviations

201212013

To provide loan financing to Not Planned Operationalise 1 0 agricultural 0 Poultry project operationalisation 10 Lack of access to marl<ets for the viable SMME projects SMME projects by 2012: in Bushbuckridge chickens continued - 1 Poultry project (Bushbuckridge)

0 Piggery projects 2 Lack of funds - 2 Piggery projects (Balfour and (Balfour and Thembisile Hani) Thembisile Hani)

- 2 Fish farming projects (Delmas; 0 Fish farming projects 2 Lack of funds Bushbuckridge) (Delmas; Bushbuckridge}

- 5 Fresh produce tunnels (Dr JS 0 Fresh produce tunnels 5 Lack of funds Moroka x 2; Nkomazi; Thembisile

Hani; Mkhondo) (Dr JS Moroka x 2; Nkomazi; Thembisile Hani; Mkhondo)

Create 456 agricultural Create 900 agricultural 0 900 No new loans have been issued development job opportunities development job opportunities due to financial constraints

6 To provide efficient Business Not Planned Repayments collection of R 16.8 m Repayments collection of -R2.4m None Processing Services on housing loans R19,2m on housing loans

Not Planned Repayments collection of R 7.2 m Repayments collection of R6,3m R0.9m Clients not adhering to their on agricultural loans on agricultural loans payment arrangements.

Not Planned Repayments collection of R 6 m on Repayments collection of -R0.4m None SMME loans R6,04m on SMME loans

Not Planned Collection of R4m repayment on Collection of R157k repayment on R3,843m Clients not adhering to their ring-fenced housing debt ring-fenced housing debt payment arrangements.

Not Planned Collection of RSm repayment on Collection of R1 ,465m repayment R6,535m ring-fenced agricultural debt on ring-fenced agricultural debt

Not Planned Collection of R2m repayment on Collection of R228k repayment on R1,772m ring-fenced SMME debt ring-fenced SMME debt

7 To provide efficient Business Not planned 17 days average housing loan 0 None No loans issued due to cash flow Processing Services processing cycle from application to constraints

approval

Not Planned 30 days average agricultural loan 0 None No loans issued due to cash flow processing cycle from application to constraints approval

Programm. I Sub-programm.:

Actual Deviation from planned Strategic ObJectives Actual Achievement 201112012 Planned Target 2012/2013 Achievement target to Actual Comment on devlatlona

2012/2013 Achievement for 2012/2013

7 To provide efficient Business Not Planned 17 days average housing loan processing cycle from 0 None No loans issued due to cash flow Processing Services application to approval constraints Continued

Not Planned 90 days average housing loan processing cycle from 0 None No loans issued due to cash flow approval to pay-out constraints

Not Planned 30 days average agricultural loan processing cycle from 0 None No loans issued due to cash flow approval to pay-out constraints

Not Planned 45 days average SMME loan processing cycle from 0 None No loans issued due to cash flow approval to pay-out constraints

Not planned 70 % of housing loan applications approved versus paid 0 70% No loans issued due to cash flow out constraints

Not Planned 80% of agricultural loan applications approved versus 0 80°.4 No loans issued due to cash flow paid out constraints

Not Planned 80% of SMME loan applications approved versus paid 0 80% No loans issued due to cash flow out constraints

Not Planned 80% of housing loan applications received versus 0 80% No loans issued due to cash flow approved constraints

Not Planned 80% of agricultural loan applications received versus 0 80% No loans issued due to cash flow approved constraints

Not Planned 80% of SMME loan applications received versus 0 80% No loans issued due to cash flow approved constraints

8 To provide non-financial Not planned 20 agricultural businesses provided with mentorship 11 9 No loans issued due to cash flow support

Not Planned 40 SMME businesses provided with mentorship 13 27 constraints

Not Planned Facilitate market programmes to B Agricultural 2 6 No loans issued due to cash flow businesses constraints

Not Planned Facilitate market programmes to B SMME businesses 0 8

Develop 4 new socio economic projects 3 Lack of funds and capacity


Programme I Su~ramme:

Baseline I Actual Actual Achievement

Deviation from planned Perfonnance Indicator Achievement 2011 I Planned Target 2012/2013


2012 Achievement for 201212013

1 Number and value of home loans provided 18 10 0 10 Cash flow constraints resulting in moratorium (R7.2m) (R4m) (R4m) being placed on issuing of new loans

2 Number and value of agricultural loans 36 16 0 16 Cash flow constraints resulting in moratorium provided (R20.5m) (R Bm) (RBm) being placed on issuing of new loans.

3 Value of Mafisa Loans provided Not planned R22m 0 R22m Loan facility was withdrawn due to non-compliance with the loan conditions which was complicated by cash flow challenges within MEGA

4 Number and value of business loans 28 12 0 12 Cash flow constraints provided (R20.6m) (R Bm) (RBm)

5 Number of BEE projects financed Not achieved 1 BEE project financed 0 1 Cash flow constraints

6 Number of CROP SMME projects: Not planned 4 Bakeries ( Albert 2 bakeries are operational 2 Deviation due to the following: operationalized Luthuli x 2; Thembisile Hani; at Albert Luthuli. - Electricity upgrade required.

Bushbuckridge; Dr JS Moroka) - Renovations for premises underway.

Not planned 3 Paint making projects (Albert 1 Paint making 3 Lack of suitable business accommodation Luthuli; Nkomazi; Mkhondo) accommodation finalized

at Nkomazi

Not planned 3 Detergent manufacturing 2 sets of detergent 1 Deviation due to the following: (Albert Luthuli; Nkomazi and making equipment - Lack of suitable business accommodation at Mkhondo) installed at Chief Albert Luthuli.

Albert Luthuli and - Nkomazi require renovations. Mkhondo

Programme I SUb-programme:

Baseline I Actual Performance Indicator Achievement 2011 I Planned Target 201212013

2012

7 Business development job opportunities 326 210 created

Number of CROP Agricultural projects: Not Planned Poultry project 8 operationalised (Bushbuckridge)

Not Planned 2 Piggery projects (Balfour and Thembisile Hani)

Not Planned 2 Fish farming projects (Delmas; Bushbuckridge)

Not Planned 5 Fresh produce tunnels (Dr JS Moroka x 2; Nkomazi; Thembisile Hani; Mkhondo)

9 Number of agricultural development job 456 900 opportunities created

10 Value of loan repayments collected Not Planned Housing : R 16.8 m

Not Planned Agriculture: R 7.2 m

Not Planned SMME :R6m

11 Value of loan repayments collected on ring- Not Planned Housing :R4m fenced debt

Not Planned Agriculture: R 8 m

Not Planned SMME :A 2m

12 Average loan processing cycle time from Not planned Housing :17 Days application received until approval (days)

Not planned Agriculture: 30 Days

Not planned SMME : 37 Days

Actual Achievement 201212013

0

0

0

0

0

0

Housing: R19,2m

Agriculture: R6,3m

SMME: R6,04m

R157k Housing

R1 ,465m Agriculture

R228kSMME

0

0

0

Deviation from planned target to Actual

Achlavement for 201212013

210

2

2

5

900

-R2.4m

R0.9m

-R0.4m

R3,843m

R6,535m

R1,772m

None

None

None

Comment on deviations

No new loans have been issued due to financial constraints

Marketing processes to source markets for the chicken not undertaken due to poor leadership processes

Lack of funds

Lack of funds

Lack of funds

No new loan applications have been processed due to financial constraints

None

Clients not adhering to their payment arrangements.

None

Clients not adhering to their payment arrangements.

No loans issued due to cash flow constraints

ProgrMime I Sub-programme:

Baseline I Actual Actual Achievement

Deviation from planned Performance Indicator Achievement 2011/ Planned Target 2012/2013



13 Average loan processing cycle time from Not Planned Housing : 90 Days 0 None No loans issued due to cash flow constraints approval to pay out {days)

Not Planned Agriculture : 30 days 0 None

Not Planned SMME :45 Days 0 None

14 Percentage of applications approved versus Not Planned Housing :70% 0 70% No loans issued due to cash flow constraints paid out

Not Planned Agriculture: 80% 0 80%

Not Planned SMME : 80% 0 80%

15 Percentage of applications received versus Not planned Housing :80% 0 80% No loans issued due to cash flow constraints finance approved

Not Planned Agriculture: 80% 0 80%

Not Planned SMME :80% 0 80%

16 Number of funded businesses provided with Not Planned Agriculture: 20 11 9 Poor performance management mentorship

Not Planned SMME :40 13 27

17 Number of funded businesses assisted with Not Planned Agriculture: 8 2 6 Poor performance management Market Facilitation Programme

Not Planned SMME :8 0 8

18 Number of new socio economic projects 2 4 Projects 1 3 Lack of funds and capacity developed [Business plan)


201212013 201112012


BUSINESS DEVELOPMENT R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 81,398 21,870 59,528 159,815 69,130 90,685


4.5 PROGRAMME 5: TRADE AND INVESTMENTS

Purpose: To promote foreign trade and investment


• 8 inward and 5 outward missions have been conducted

• R38,2 million export trade facilitated

• 6 exporter training sessions facilitated

• 5 outward and 3 local trade exhibitions have been conducted

• 5 inward trade delegations from Finland and Japan hosted.

• 70 job opportunities created

• 8 emerging exporters registered on the trade point Mbombela





[J Number of Targets Partially Achieved


[J Number of Targets Not Planned

1. A number of Enquiries are followed up in order to be converted into Projects

2. An aggressive approach to the Interaction with More Embassies and Consulates as a source of Inward coming delegations

3. Markets to be diversified and focus on SADC Countries and Emerging Markets such as Brazil, India, Malaysia

4. An aggressive approach to the Interaction with More Embassies and Consulates as a source of Inward coming delegations.

5. A turnaround strategy is developed for the Trade Point South Africa to benefit and improve the performance of the Mbombela Trade Point

Efforts to be directed in Labour intensive projects and speed up the process of conversion of Leads into Projects.




Strategic Objectives

1 To attract investment

2 To stimulate foreign trade

3 To facilitate investment implementation

Actual Achievement 2011flC)12 Planned Target 2012/2013

R346 million new direct investments R400 million facilitated

Actual Achievement 2012/2013

R262 million new direct investment facilitated

Not planned Facilitate 6 feasibility studies: Sugar 0 processing; cable production; forestry; rubber; footwear; Trade Point from Oman;

12 inward investment missions hosted 12 8

3 outward investment missions 6 5 conducted

R68.3 million export trades facilitated R200 million R38.2 million

5 exporter training sessions facilitated 5 6

3 local trade exhibitions conducted 3 5

3 outward trade exhibitions conducted 6 3

7 inward trade delegations hosted 7 5

13 emerging exporters registered on 25 8 the trade point Mbombela

New Investment projects implemented 2

165 job opportunities created 370 70

Deviation from planned target to Actual

Achievement for 2012/2013

A 138m

6

4

R161.8m

-1

-2

3

2

17

300

Comment on deviations

It has taken longer to convert Enquiries/leads to investment projects due to the length of time for decision making by Investors

This research work has been handed over to DEDET)

The Economic slow-down and the financial crisis in the Euro Zone has had a negative effect on Business delegations visiting South Africa

Budgetary constraints

The Economic slow-down and the financial crisis in the Euro Zone has had a negative effect on the growth of Businesses and exports.

Poor performance management

Poor performance management

Budgetary Constraints

The Economic slow-down and the financial crisis in the Euro Zone has had a negative effect on Business delegations visiting South Africa

Trade point System was undergoing a reengineering during the first quarter. Secondly, Recruited companies did not provide all the required information

The facilitation process has taken longer than anticipated and there were no projects readily available for implementation

The target was not achieved due to only one project that was implemented and could only create a few jobs

Key performance indicators, planned targets and actual achievements ProgrMime I Sub-programme:

Baseline I Actual Planned Target Actual Achievement

Deviation from planned Performance Indicator Achievement 2011

201212013 201212013 target to Actual Comment on deviations

/2012 Achlavemenl for 201212013

1 Value of new direct investment facilitated (R million) R346m R400m R262 million new direct R138m It has taken longer to convert Enquiries/leads to investment facilitated investment projects due to the length of time for

decision making by Investors

2 Number of feasibility studies for investment projects: Not Planned 6 0 6 This research work has been handed over to Sugar processing; cable production; forestry; rubber; DEDET) footwear; Trade Point from Oman;

3 Number of Inward investment missions hosted 12 12 8 4 The Economic slow-down and the financial crisis in the Euro Zone has had a negative effect on Business delegations visiting South Africa

4 Number of outward investment missions conducted 3 6 5 1 Budgetary constraints

5 Value of export trade facilitated R68.3m R200million R38.2million R161.8m The Economic slow-down and the financial crisis in the Euro Zone has had a negative effect on the growth of Businesses and exports.

6 Value of exporter training sessions facilitated 5 5 6 -1 Poor performance management

7 Number of local trade exhibitions conducted 3 3 5 -2 None

Number of outward trade exhibitions conducted 3 6 3 3 Poor performance management

9 Number of Inward trade delegations hosted 7 7 5 2 Budgetary Constraints

10 Number of emerging exporters registered on the 13 25 8 17 The Economic slow-down and the financial crisis trade point Mbombela in the Euro Zone has had a negative effect on

Business delegations visiting South Africa

11 Number of new investment projects implemented Not achieved 2 1 1 The facilitation process has taken longer than anticipated and there were no projects readily available for implementation

12 Number of job opportunities created 165 370 70 300 The target was not achieved due to only one project that was implemented and could only create a few jobs


201212013 201112012

Sub- Programme Name Budget Actual Expenditure (OVer)IUnder Expenditure Budget Actual Expenditure (OVer)IUnder Expenditure

TRADE AND INVESTMENT R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 7,319 2,862 4,467 7,215 4,860 2,555


4.6 PROGRAMME 6: FINANCIAL MANAGEMENT

Strategic ObJective 6: To provide financial management policies and solutions


• 3 management reports provided

• 3 reconciliations conducted

• 3 monthly expenditure analysis report and budget variances reports were prepared

• A statutory financial infonnation report was provided

• Average lead time from order placed until goods received of 3 work days achieved

• 1 00% of order defaults detected and corrected

• 80% of ICT incidents logged, resolved within agreed upon service levels

• 95% of system performance up time achieved



CTotal Number of Targets





1. A strategic intervention is being sought to develop a business model to ensure MEGA sustainability and less dependency on Government grant in line with PFMA schedule 3D listing

2. Payments of commitments within 30 days to avoid additional/new accruals

3. Appointment of service provider to conduct assets verification and valuation in terms of IAS/GAAP fair value methodology

4. Stream line and consolidate contracts with provision of similar goods and services.

5. Enter into settlement agreements for repayments of debts.

6. Regular meetings are held with regional offices to introduce procedures aimed at reducing the order time while complying to Treasury regulations.

7. Implementation of supplier data base with quick access in issuing an orders.

8. Appointment of Deloitte for strategic intervention inclusive of Finance work stream to assist with audit readiness and implementation of prior year findings.

Changes to planned targets There were no changes in performance indicators during the year.

Strategic objectives, planned targets and actual achievements Programme I Su~ramme:

Deviation from planned Strategic ObJectives Actual Achievement 201112012 Planned Target 201212013 Actual Achievement 201212013 targat to Actual Comment on deviations

Achievement for 201212013

1 To provide management 12 management accounting Provide 12 management 12 management accounting reports None None accounting solutions reports provided accounting reports provided

12 reconciliations conducted Conduct 12 reconciliations 13 reconciliations conducted -1 The additional one reconciliation is the year-end inventory/stock

OWn revenue versus grant Achieve own revenue versus 48:52 12 and -12 respectively Cross subsidisation within revenue revenue of 55:45 ratio achieved grant revenue of 60:40 ratio i.e. R 154,185,465 own revenue and streams and Government grant in

R 170,031,943 Government grant support of the entire MEGA. incl. R60m special allocation

Maximum of 10% variance Achieve maximum of 10% OPEX is 2% over budget and its 2% Payments from the opex budget included achieved variance offset by 65% under spending on accruals from 2011/12 and City of

development finance( moratorium) Tshwane debt, contractual obligations hence a total effect of 12%under and legal cases from the three merged budget variance for the financial year entities

Business net worth of R 1 .1 billion Achieve business net worth of Business net worth of R1.54 billion -R0.53billion Prior year assets verification and achieved R1.1 billion achieved valuation was not done according to

applicable accounting standards

1 budget approved Approve 1 budget 1 budget approved None None

2 To provide financial Not achieved Achieve 1 clean audit report 0 1 Prior year findings and implementation of accounting solutions audit recommendations based on

disclaimer opinion. Alignment of merged Entity with a development of a new strategic plan and business plan and processes.

12 financial accounting reports 12 financial accounting reports 12 financial accounting reports None None provided provided provided

5 statutory financial information 5 statutory financial information 5 statutory financial information None None reports provided reports provided reports provided

Not achieved Average creditor days of 30 Average creditor days of 30-45 days None None -..... achieved working days achieved ~


Deviation from planned target to Strategic ObJectives Actual Achievement 201112012 Planned Target 201212013 Actual Achlavement 201212013 Actual Achlavement for Comment on deviations

201212013

3 To provide supply chain Average lead time from order Average lead time from order Average lead time from order 1 and above SCM being centralised at Head management solutions placed until goods received was placed until goods received of 3 placed until goods received was Office. Cash flow management to

more than 5 working days work days achieved more than 3 working days be in line with the approved budget

9 asset reconciliation with asset 9 asset reconciliation with asset 9 asset reconciliation with asset None None register conducted register conducted register conducted

Not achieved 1 00% of order defaults detected, 1 00% of order defaults detected, None None corrected corrected

4 To provide ICT management 60% of ICT incidents logged, 80% of ICT incidents logged, 80% of ICT incidents logged, None None solutions resolved within agreed upon resolved within agreed upon service resolved within agreed upon

service levels levels service levels

80% of system performance up 95% of system performance up time 95% of system performance up None None time achieved achieved time achieved

Not achieved 1 systems designed I upgraded, 2 systems designed I upgraded, -1 None implemented implemented

5 To provide debt collection 80% of revenue budgeted versus 80% of revenue budgeted versus 80% of revenue budgeted versus -6% None solutions actual collected actual collected actual collected



Baseline I Actual Planned Target Deviation from planned Performance Indicator Achievement 2011 I 201212013 Actual Achievement 201212013 target to Actual Comment on deviations

2012 Achievement tor 201212013

1 Number of management accounting reports 12 12 12 None None provided

2 Number of reconciliations conducted 12 12 13 -1 The additional one reconciliation is the year-end inventory/stock

3 Own revenue versus grant revenue (% ratio) 55:45 60:40 48:52 12 and -12 respectively Cross subsidisation within revenue streams i.e. R 154,185,465 own revenue and and Government grant in support of the entire R 170,031,943 Government grant MEGA. incl. R60m special allocation

4 Variance on budget spent (%) 10% 10% 12% under budget 2% Payments from the opex budget included accruals from 2011112 and City of Tshwane

OPEX is 2% over budget and its debt, contractual obligations and legal cases offset by 65% under spending on from the three merged entities development finance( moratorium) hence a total effect of 12%under budget variance for the financial year

5 Value of business net worth achieved R1.1 billion R1.1 billion R1, 54 billion R0.53 billion Prior year assets verification and valuation (R billion) was not done according to applicable

accounting standards

6 Number of budget approved 1 1 1 None None

7 Number of clean audit report achieved Not achieved 1 0 1 Prior year findings and implementation of audit recommendations based on disclaimer opinion. Alignment of merged Entity with a development of a new strategic plan and business plan and processes.

8 Number of financial accounting reports provided 12 12 12 None None

9 Number of statutory financial information 5 5 5 None None provided

Programm. I Su~ramm.:

Baseline I Actual Planned Target

Deviation from planned Performance Indicator Achievement 2011/

201212013 Actual Achievement 201212013 target to Actual Comment on deviations


10 Average creditor age (days) Not achieved 30achieved 30-45 days None None

11 Average lead time from order placed until goods More than 5 working Less than 3 working More than 3 working days. 1 and above SCM being centralised at Head Office. Cash reoeived (work days) days days flow management to be in line with the

approved budget

12 Number of asset reconciliation with asset register 9 9 9 None None conducted

13 Order defaults detected, corrected (%) Not achieved 100% 100% None None

14 ICT incidents logged, resolved within agreed 60% 80% 80% None None upon service levels

15 System performance up time achieved (%) 60% 95% 95% None None

16 Number of clean audit report achieved Not achieved 1 2 -1 None

17 Revenue budgeted versus actual collected 60% 80% 86% -6 None


201~13 I 201112012

Sub- Programme Name Budget Actual Expenditure (OVer)IUnder Expenditure Budget Actual Expenditure (OVer)IUnder Expenditure

FINANCIAL MANAGEMENT R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 73,401 69,848 3,553 55,541 59,850 (4,309)


4.7 PROGRAMME 7: CORPORATE SERVICES

Strategic ObJective 7: To ensure sound support In the fields of human resource, Legal and logistics/ facilities management


• 80% of funded positions have been filled

• Implementation of the final operational organisational structure

• Implementation of the Occupational Health and Safety Plan

• 1 performance report on legal services provided.

1&A-----------------------------~ 14 ~~------------------------~ 12 10 8 6 4 2 0



IJTotal,.,.mberofTargets

• ltl.lmber of Targets Achieved

D ltl.lmber of Targets Partially Achieved

• ltl.lmber of Targets Not Achieved


1. To develop specifications of the survey and conduct the survey in the next financial year

2. Employment Equity Plan to be implemented in the next financial year

3. Review of job profiles now done, skills development plan to be implemented in the next financial year



Strategic objectives, planned targets and actual achievements Programme I &~»programme:

Deviation from planned target to Strategic Objectives Actual Achievement 2011/2012 Planned Target 201212013 Actual Achievement 201212013 Actual Achievement for Comment on deviations

2012/2013

1 To provide human resource BO% of 260 funded positions To fill 80% of 260 funded 83% of 260 funded positions -3% None administration services filled positions filled, i.e. 217 positions

Not achieved Achieve 45% rating on an 0% 45% Policy development & other employee satisfaction survey merger related activities delayed

the process

Not planned Integrate 100% of HR Policies 1 00% of HR Policies integrated None None

Not planned Implement the final operational 1 operational organisational None None organisational structure structure implemented

Not planned Implement the Employment 0 1 Delayed due to integration of Equity Plan policies

Not planned Implement the Operational Operational Health and Safety None None Health and Safety Plan Plan implemented

2 Human resource development Not achieved Meet 70% of the skills 0% 70% Delayed due to job profiles development plan targets review

3 Industrial relations 70% of grievances I disputes Resolve 1 00% of grievances I 1 00% of grievances I disputes None None received resolved disputes received received resolved

4 To provide logistics I facilities Not achieved 70% performance against a 0% 70% Lack of capacity management services client satisfaction survey

5 To provide effective corporate Not Planned 45% rating on an image survey 0% 45% Communication strategy not in communications and marketing place services

8 To provide legal services Not Planned Provide 4 performance report 4 performance reports provided None None

7 To provide skills development 0% 90% 0% 90% Plan to review job profiles was support (registered) This KPA is the same as KPA 7 put on hold in order to align it to

the turn-around strategy


Programme I Su~ramme:

Baseline/ Actual Deviation from planned

Perfonnance Indicator Achlevemenl2011/2012

Planned Target 201212013 Actual Achievement 201212013 target to Actual Comment on deviations Achievement for 2012/2013

1 Funded positions filled {%) 80% 80% of 260 funded positions 83% of 260 funded positions -3% None filled filled, i.e. 217 positions

2 Employee satisfaction rating (%) 0% 45% 0% 45% Policy development & other merger related activities delayed the process

3 HR Policies integrated (%} 0% 100% 100% None None

4 Number of organisational structures finalised 0 1 1 None None and implemented

5 Number of Employment Equity Plan 0 1 0 1 Delayed due to integration of developed and implemented policies

6 Number of Operational Health and Safety 0 1 1 None None Plans developed

7 Skills development plan targets met (%) 0% 70% 0% 70% Delayed due to job profiles review

8 Received grievances I disputes resolved (%} 70% 100% 100% None None

9 Logistics I facilities services performance 0% 70% 0% 70% Lack of capacity against a client satisfaction survey (%)

10 Effective marketing and communication 0% 45% 0% 45% Communication strategy not in place

11 Legal services provided as per service level Not planned 4 4 None None agreement

12 Meet 90% of the skills development plan 0% 90% 0% 90% Plan to review job profiles was put targets This KPA is the same as KPA 7 on hold in order to align it to the

tum-around strategy


201~13 2011nG12

Sub- Programme Name Budget Actual Expenditure (Over)/Under Expenditure Budget ActuaiExpend~ure (Over)/Under Expenditure

COORPORATE SERVICES R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

TOTAL 126,223 118,446 7,777 134,292 107,391 26,901

5. SUMMARY OF FINANCIAL INFORMATION

5.1. Revenue Collection

201212013 2011/2012

Sources of revenue Estimate Actual (OVer)/Under

Estimate Actual (OVer)/Under

Amount Collected Collection Amount Collected Collection

R'OOO R'OOO R'OOO R'OOO R'OOO R'OOO

Municipal Services 72,486 78,708 (6,222) 69,250 64,253 4,997

Rent 32,619 25,656 6,963 30,738 25,063 5,675

Interest on Loans 19,888 16,147 3,741 23,785 15,220 8,565

Other 19,485 13,721 5,764 21,445 19,665 1,780

Total 144,478 134,232 10,246 145,218 124,201 21,017

The public entity should describe in some detail how they have delivered on the plans for revenue collection. Where there is under collection of revenue indicate the reasons for the under collection. Indicate what measures were taken during the course of the year to keep on target. Indicate what impact the under collection of revenue has had on service delivery.

Where it exceeded its target, the public entity should provide reasons for the better than anticipated performance. The public entity can also use this section to report on new measures instituted during the course of the year to raise additional revenue or to ensure more efficient/effective collection.

5. SUMMARY OF FINANCIAL INFORMATION CONTINUED

5.2. Programme Expenditure

201212013 2011/2012

Sources of revenue Estimate Actual (OVer)/Under

Estimate Actual (OVer)/Under

Amount Collected Collection Amount Collected Collection


Office of the CEO 5,141 3,467 1,674 7,874 6,555 1,319

Special Projects 3,370 1,505 1,865 552 294 258

Property Development 54,666 54,666 (28,438) 67,526 60,519 7,007 and Management

Business Development 81,398 21,870 59,528 159,815 69,130 90,685

Trade and Investment 7,319 2,862 4,457 7,215 4,660 2,555

Financial Management 73,401 69,848 3,553 55,541 59,850 (4,309)

Corporate Services 126,223 118,446 7,777 134,292 107,391 26,901

Total 351,518 301,102 50,418 432,815 308,399 124,418

Public entities must provide a summary of the actual expenditure in comparison to the budget for both the current year and prior year. The information must be provided at a programme level and must agree to the audited financial statements. Reasons for variations should be linked to the information discussed above in the organisational environment and the service delivery environment.

5. SUMMARY OF FINANCIAL INFORMATION CONTINUED

5.3. Capital investment, maintenance and asset management plan

• Asset management policy has been approved and being utilised by the Entity.

• No facilities were closed down. A rationalisation exercise is being performed by means of the Tum-around intervention project.

• No maintenance was done regarding the infrastructure.

• There were four disposals of R35,413 due to theft, during the year under review.

• MEGA appointed a service provider for the impairment and valuation of all assets, an asset register was compiled from the valuation and impairment results. Monthly updates and reconciliations are performed to ensure effective and efficient asset register and asset management.

• The current state of the public entity's capital assets :

%Good % Fair %Poor

Plant and machinery 3.08 82.15 14.77

Furniture and fixtures 4.81 90.42 4.77

Motor vehicles 35.29 64.71 0.00

Office equipment 6.60 79.51 13.89

IT equipment 41.56 1.30 57.14

• No major maintenance projects were performed, only normal day-to-day emergencies occurred, e.g. burst pipes, leaking pipes and leaking roofs.

20U/2013 201112012

Maintenance expenditure Budget Actual (Over)/Under Budget Actual (Over)IUnder Expenditure Expenditure Expenditure Expenditure


Maintenance - Vehicles 89,555 7,220 82,335 44,736 27,442 17,294

Maintenance - Equipment 195,190 558,889 (363,699) 274,326 307,375 (33,049)

Maintenance - Buildings 4,334,509 1,469,787 2,864,722 7,751,118 3,090,006 4,661,112

Maintenance - Other 98,214 79,910 86,732 1,076,121 1,557,313 (481,191)

Total 4,717,468 2,115,807 2,670,090 9,146,302 4,982,136 4,164,166

PART GOVERNANCE

1. INTRODUCTION

Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. In addition to legislative requirements based on a public entity's enabling legislation, and the Companies Act, corporate governance with regard to public entity's is

2. PORTFOLIO COMMITTEES

The Portfolio Committee on Agriculture, Rural Development and Land Administration; Economic Development, Environment and Tourism (the Committee) has a Constitutional mandate, in terms of section 114(2) (b) of the Constitution of the Republic of South Africa, Act. 108 of 1996 (the Constitution), read with rule 124(b) of the Rules and Orders of the Mpumalanga Provincial Legislature, to ensure fiscal discipline, accountability, efficient co-ordination and good governance through oversight of the Department of Economic Development, Environment and Tourism (the department)

As part of its oversight work, the Committee convened on the following dates to consider the Agency's Annual Performance Plan, Budget and Quarterly Performance Reports:

DATE REPORT CONSIDERED

8 May 2012 Annual Performance Plan

Budget

11 September 2012 Quarterly Report (1st Quarter)

8 November 2012 Annual Report for 2011/12

Quarterly Report (2nd Quarter)

26 March 2013 Quarterly Report (3rd Quarter)

applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King's Report on Corporate Governance.

Risk areas identified and implementation plans I actions by the Agency are highlighted below:

RESOLUTIONS TAKEN BY THE PROGRESS ON THE PORTFOLIO COMMrTTEE TO ... PLEMENTAnON OF THE ADDRESS IDENnFIED RISK RESOLUTIONS AREAS

MEC to ensure that MEGA Board The tum-around strategy was operates efficiently and stabilise implemented by the Board the entity

Board must approved the Organisational structure was organisational structure approved by the Board

MEC to ensure that the CEO is CEO was appointed appointed

MEGA to assist CROP projects CROP projects prioritised and progress report on the projects being implemented are submitted to OEOET timeously

Coated implementation plan to be The casted implementation plan of completed and submitted to the the bulk water was compiled and Committee submitted to the Committee.

MEGA to ensure that the MEGA's registration as a public outstanding legislative issues are entity by National Treasury has finalised since been finalised.

MEGA to play a facilitator role in The project was transferred to the the establishment of the ICC Mbombela Local Municipality

3. EXECUTIVE AUTHORITY

Details on reports submitted to the Executive Authority and the dates submitted are outlined below:

REVISED STRATEGIC PLAN

Due to the Business Turn-around strategy undertaken by the Board and the new mandate on Bulk Water Infrastructure Project, there was a need to revise the Strategic Plan so that is it in line with the new business model.

The revised Strategic Plan was submitted to the Executive Authority on 31st January 2013.

ANNUAL PERFORMANCE PLAN

The Annual Performance Plan was submitted to the Executive Authority on 30th March 2012.

QUARTERLY REPORTS

DATE SUBMITIED

1st Quarter Report 31 July2012

2nd Quarter Report 7 November 2012

3rd Quarter Report 31 January 2013

COMPLIANCE ASSURANCE ASSESSMENT (PFMA COMPLIANCE CHECKLIST)

DATE SUBIIrTTED

1st Quarter Report 31 July 2012

2nd Quarter Report 7 November 2012

3rd Quarter Report 31 January 2013

There were no issues raised by the executive authority on the Reports submitted except those raised by the Portfolio Committee

4. THE ACCOUNTING AUTHORITY I BOARD

Introduction

MEGA is a scheduled 3D entity by virtue of being the successor in title of the erstwhile MEGA, which was established by the then MEGA ACT No.4 of 2005. MEGA, is governed by a duly appointed Board of Directors. Scheduled 3D entities are regulated by Sections 47 & 76(4) of the PFMA. The Board of Directors is the Accounting Authority for the Agency as contemplated in Section 49(2) (a) of the Public Finance Management Act of 1999, as indicated in (Section. 5(1) of the MEGA Act 1 of 201 0). The Board shall, in respect of the exercise & performance of its powers & functions, be accountable to the Member of the Executive Council. (Section.5 (2) of the MEGA, Act 1 of 201 0). The Board shall, consist of not fewer than nine & not more than eleven Members eligible to vote at Board meetings. (Section.5(3). In addition, the Head of Department (HOD) of the Department of Economic Development, Environment & Tourism is the Accounting Officer of the Department, or any person so designated by the HOD, is an ex officio member of the Board without voting powers. (Section. 5(4) of the MEGA Act 1 of 2010).

The establishment of the Board is governed by Sec.5 (1-4) of the Mpumalanga Economic Growth Agency Act 1 of 2010

In terms of section 12 of the MEGA Act 1 of 2010, the duration of term of office of Board Members shall be a period not exceeding four years.

The role of the Board

The Board is the Accounting Authority in terms of the PFMA. The Board Charter sets out the roles and responsibilities of the Board as well as salient corporate governance principles.

Board Charter

In terms of the Treasury Regulations issued in accordance with the PFMA,MEGA must in consultation with its relevant Executive Authority(the MEC for Economic Development, Environment & Tourism),annually conclude a Shareholders Compact documenting the mandated key

perfonnance measures & indicators to be attained by the organization as agreed between the Board of Directors & the Shareholder.

Delegation Of Authority

The Board retains full and effective control over the organization. This responsibility is facilitated by a welldeveloped governance structure comprising various Board Committees established in terms of Section 24 of the MEGA Act 1of 2010, and a comprehensive delegation of authority framework. The delegation framework assists in the control of the decision-making process and does not dilute the duties and responsibilities of the Directors.

Board Induction And Orientation

New Directors are taken through an induction programme designed to enhance their understanding of MEGA's legislative framework, its governance processes and the nature and operations of the company. Continuous training is provided on request, to meet the needs of each director. Directors are also made aware of new laws and regulations on an ongoing basis.

Board Evaluation And Performance

Members of the Board are evaluated collectively on the basis of value added to the organization and their individual contribution to the Organization's success.

Composition of the Board

Members of a permanent Board were appointed on 01 April 2011 and subsequently individually relieved of their duties in June 2011 by the Member of the Executive Council, in line with Section 9 of the Mpumalanga Economic Growth Agency Act, No.1 of 201 0, and after consultation with the Executive Council based on performance and governance related issues.

An interim Board was then appointed on 01 September 2011 to 31 March 2012. The permanent Board appointed in 1 April 2012, was appointed to complete the term of office of the previous Board that was relieved of its duties by the Members of the Executive Council.

4.

1.

Mr. JS Vilakazi Chairperson

5.

MEMBERS OF THE BOARD Appointment Date: 1 April 2012

Mr. D Mculu Deputy Chairperson

6.

3.

Mr. A Bam Board Member

7.

Mr. J Lindai Board Member

Mr. D P Mahlangu Board Member

Adv. A Mothibia Board Member

Ms. SXulu Board Member

B.

Ms. H Ralinalai Board Member

Ms. PNZ Fakude-Nkuna Chairperson

9.

Mr. P J Van Der Walt (Resigned 25 March 2013)

Board Member

12.

Adv. B Mkhize Board Member

(CEO)

Ms. N Ntshangase Chairperson

DrVDiamini DEDET Representative

(Ex Officio) Chairperson

4. THE ACCOUNTING AUTHORITY I BOARD: CONTINUED

BOARD MEETINGS

Dates of meetings are scheduled annually in advance. In terms of the King iii Report on Good Governance, the Board and its Sub Committees should at least have four scheduled meetings per annum. Additional and or special meetings are convened as and when material issues arise, requiring decisions by the Board. Six (06} Board meetings were convened in the period under review (1st of April 2012 - 31st of March 2013}. The quorum for the Board meetings is 50 % + 1 (simple majority).

The attendance as well as the Board members names at these meetings is as follows:

Board Members No. of Matlngs Attended

1. Mr. JS Vilakazi {Chairperson) 6/6 2. Mr. D Mculu (Deputy Chairperson) 6/6 3. Mr. A Bam 6/6 4. Mr.J E Unda 516 5. Mr. D P Mahlangu 6/6 6. Adv. A L Mothibi 4/6 7. Ms. SXulu 516 8. Ms. H Ralinala 3/6 9. Mr. P J Van DerWalt 3/6 10. Ms. N Ntshangase 4/6 11. Ms. P N Z Fakude-Nkuna 516 12. Adv. B M Mkhize (CEO) 4/6 13. Dr. V Dlamini DEDET Representative (Ex Officio) -

BOARD COMMITTEES

The MEGA Board is empowered in terms of section 24 of the MEGA Act 1 of 201 0 to establish Board Committees. In the year currently under review, six (6} Board Committees were established.

The following Board Committees were formed in order to assist the Board in discharging its responsibilities. This assistance is rendered in the form of recommendations and reports submitted to Board meetings ensuring transparency and full disclosure of Committee activities. All Committee Members are non-Executive Directors.

1. Audit and Risk Committee 2. Procurement Committee 3. Loans Committee 4. Finance and Investment Committee 5. Human Resources and Remuneration Committee 6. Board EXCO (Comprising of all Chairpersons of Board

Sub- Committees)

BOARD AUDIT RISK & COMPLIANCE COMMITTEE

The Audit and Risk Committee is comprised of a minimum of three members and chaired by an independent nonexecutive director.

The Committee is responsible for monitoring compliance with relevant legislation and ensures that an appropriate system of internal control is maintained to protect the organizations' interests and assets. The Committee also reviews the accuracy, reliability and credibility of financial reporting and recommends the annual financial statements and the annual report of MEGA together with the external auditors report for approval by the Board.

The quorum for committee meetings is three (3).

Four meetings were held during the 2012/2013 financial year. The attendance by Committee members at these meetings was as follows:

Committee Members No. of lleetlnp Atbtnded

1. AcJ:o/. A L Mothibi (Chairperson) 4/4 2. Mr. J E Linda 4/4 3. Ms. H Ralinala 0/4 4. Mr. D Mculu 4/4

BOARD HUMAN RESOURCES & REMUNERATION SUB

COMMITTEE

The Human Resource and Remuneration Committee is comprised of non-executive directors.


The objectives of the Human Resource and Remuneration Committee are to recommend and advise the Board on reward and remuneration and other personnel related policies. The Committee aims to ensure compliance to relevant legislation including the Basic Conditions of Employment Act, the Employment Act, the Labour Relations Act and the Skills Development Act.

The quorum for committee meetings is three (3).

Five (5) HR Committee meetings were held during the 2012/2013 financial year. The attendance by Committee members at these meetings was as follows:

No.af Meetlnp Attended

1. Ms. S Xulu (Chairperson) 515 2. Ms. PNZ Fakude-Nkuna 4/5 3. Mr. D Mculu 4/5 4. Ms. N Ntshangase 4/5 5. Mr. J E Linda 015

(Additional Member of the Committee as of 29/01/13)

BOARD LOANS SUB COMMITTEE

The Board Loans Committee is comprised of nonexecutive directors.

The objectives of the Loans Committee are to approve loan application above the delegated management's authority and to provide guidelines to be followed by management for considerations of financial assistance proposals submitted by potential clients to MEGA and to ensure that MEGA complies with the terms of the National Credit Act, Act No 34 of 2005, Financial Intelligence Centre Act No 38 of 2001, Housing Act No 1 07 of 1997, Agriculture Laws Extension Act No 87 of 1996, National Small Business Act No 1 02 of 1996, Broad Based Black Economic Empowerment Act No 53 of 2003, Preferential Procurement Policy Framework Act No 5 of 2000 amongst others, in its consideration of financial assistance requests.

The quorum for committee meetings is three (3). One (1) Committee meeting was held during the 2012/2013 financial year.

The attendance by Committee members at these meetings was as follows:

Committee llembera No. af llleetlnge Attended

1. Mr. D P Mahlangu (Chairperson) 1/1 2. Mr. J E Linda 1/1 3. Adv. A L Mothibi 0/1 4. Ms. N Ntshangase 1/1

A moratorium was placed on further issuing of loans when the MEGA Board was appointed 01 April2012, hence only one meeting was held.

BOARD FINANCE AND INVESTMENT SUB COMMITTEE

The Finance and Investment Committee is comprised of non-executive directors.

The Committee is responsible for ensuring that the entity's borrowings and leases are handled in accordance with the Treasury Regulations, providing inputs on strategic plan document, checking the accuracy of the annual draft budget and ensuring that MEGA maintains sound systems of cash, bank and investment management.

The quorum for committee meetings is three (3). Five (5) meetings were held during the 2012/2013 financial year.


Commm .. Mem-. No. of MMtlnp Attended

1. Mr. A Bam (Chairperson) 5/5 2. Mr. D P Mahlangu 515 3. Ms. PNZ Fakude-Nkuna 2/5 4. Ms. SXulu 515 5 Mr. P J Van Der Walt 1/5


BOARD PROCUREMENT SUB COMMITTEE

The Procurement Committee is comprised of nonexecutive director. The Committee is responsible for providing an oversight role in inter'alia, the provision and procurement of any supply or service, hiring or letting anything, acquiring or granting any right or acquiring or disposing of any asset for or on behalf of the entity in terms of Section 23 of the MEGA Act so as to ensure that the entity maintains effective procurement processes.

The quorum for committee meetings is three (3).Two (2) meetings were held during the 2012/2013 financial year.


Committee Members No. of Meetings Att.nct.d

1 . Ms. H Ralinala (Chairperson) 212 2. Mr.ABam 212 3. Mr. P J Van Dar Walt 112 4. Mr. D Mculu 212

BOARDEXCO

The Board Exec comprises of all Chairpersons of Board sub-committees. The role of the Committee is to filter all information from the respective Board sub-committees so as to assist the Board in final decision making.

The quorum for committee meetings is three (4). Eight (8) meetings were held during the 2012/2013 financial year.


Committee Members No. of Meetings Attended

1. Mr. JS Vilakazi (Chairperson) 7/8 2. Mr. D Mculu (Deputy Chairperson) 313 3. Ms. S Xulu 818 4. Ms. H Ralinala 318 5. Mr. DP Mahlangu 718 6. Mr. A Bam 818 7. Adv. A Mothibi 518

EXECUTIVE MANAGEMENT COMMITTEE (201212013)

The Executive Management Committee (EXCO) comprises of the Chief Executive Officer, Chief Financial Officer, Company Secretary and all Heads of Divisions. The Committee is chaired by the Chief Executive Officer.

The Committee assists the Chief Executive Officer in guiding and controlling the overall direction of the organization and in exercising executive oversight. It is responsible for ensuring the effective management of the day to day operations of the organization.


Committee O.lgnatlon No. of Members Meetings

Attended

1. Adv B M Mkhize Chief Executive Officer 2115 2. Mr. V Mqhum Chief Financial Officer 11/15 3. Mr. P J Velelo Acting Head: Agriculture 14/15 4. Mr. T S Nobela Acting Head: SMME 12/15 5. Mr. A Scheepers Head: Special Projects & Subsidiaries 12115 6. Ms. P N Z Nqeto Head: Trade & Investment 11/15 7. Mr. G Nel Acting Head: Properties Management 10/15 8. Mr. J B Mahlangu Head: Housing 11115 9. Mr. JM Mkhonto Head: Corporate Services 5/15 10. Ms. Z C Sibanda Chief lntemal Auditor 7/15 11 . Ms. S P Morgan Company Secretary 8/15 12. Mr. B B Zulu Acting: Chief Internal Auditor 6/15


NOTES:

* Mr. J B Mahlangu -Acting Chief Executive Officer from 15 March 2012 to 30 November 2012.

* Adv B M Mkhize- Appointed Chief Executive Officer effective 01 December 2012.

* Mr. B B Zulu- Acting Chief Internal Auditor from 1St January to 30 August 2012.

• Ms. ZC Sibanda- Appointed Chief Internal Auditor 01 September 2012

• Mr. JM Mkhonto- Contract lapsed 31 July 2012

Remuneration of board members

Non-executive directors receive fees for their contributions to the Board and the Committees on which they serve. The fees paid to all non-executive directors are currently determined by the National Treasury Guidelines.

A detailed remuneration table of Board members is contained on page 130 of the Annual Financial Report.

5. RISK MANAGEMENT

• Nature of risk management Risk Management was outsourced to Grant Thornton Consulting. Risk Management has remained an integral part of the entity during the year under review. The enterprise-wide approach to risk management was adopted.

• Risk management strategies to Identify risks and manage the risks Risk assessment reviews are conducted annually and specifically address strategic, operational, human resource, information technology and financial risks. Risk register was developed from the risk assessment report.

6. INTERNAL CONTROL UNIT

Work performed by internal control unit during the year

The Chief Executive Officer has the responsibility for establishing a framework for internal control designed to effectively provide reasonable assurance against material losses, including appropriate risk management and good corporate governance framework and systems.

Risk Management position has been developed and will be filled in the next financial year.

• Progress made In addressing risks Identified Risks identified are reported to the Audit Committee on a quarter1y basis. Risk management committee will be established to monitor the implementation of the mitigation strategies by risk owners. The entity will continue to strive for effective risk management. Mitigation plan has been developed where on bi-monthly was monitored on the implementation progress and the effectiveness of the control measures in place.

The entity has established key controls measures that focus on critical areas identified. Internal Auditors assessed and evaluated the effectiveness of internal controls. The controls include delegation of authority and policies and procedures.

The controls are designed to provide a cost effective assurance that the entity's assets are safeguarded and resources are efficiently managed.

7. INTERNAL AUDIT AND AUDIT COMMITTEES

• Key activities and objectives of the internal audit The internal audit unit is functioning in tenns of the audit charter, which provides a structured framework for conducting internal audit work. The internal audit function was co-sourced as the in-house structure is not able to carry out the plan due to inadequate staff.

8.

• Specify summary of audit work done The internal audit unit has conducted audits in line with the approved internal audit plan for 201212013, which was drawn up in accordance with Treasury Regulations Paragraph 3.2.7 and Standards for Professional Practice in Internal Audit (SPPIA). The plan was recommended by the Audit Committee and approved by the Board of Directors.

COMPLIANCE WITH LAWS AND REGULATIONS

As a Provincial Government Business Enterprise, MEGA is subject to numerous laws, rules and regulations. The entity must comply with all applicable legislative prescripts as well as internal policies that are approved by the Accounting Authority. The PFMA and the MEGA Act are the basis on which MEGA must start with compliance, followed by all other legislations that regulate MEGA's operations in relation to the different business units.

9. FRAUD AND CORRUPTION

The findings of the Internal Audit, which were based on the risk assessments conducted, revealed certain weaknesses as outlined in the Audit Committee Report on page 63. Due to these weaknesses, the fraud prevention plan was not reviewed and the implementation process was therefore put on hold. These weaknesses will be addressed through the implementation of the turnaround strategy where the fraud prevention plan will also be implemented.

A compliance checklist has been developed and compliance is monitored on a quarterly basis, in line with the reporting framework which is the submission of quarterly reports. The year under review has not resulted in any penalties nor reprimands for non-compliance with statutes, and therefore we can conclude that the Entity did generally comply with applicable laws and regulations.

addressed through the implementation of the turnaround strategy where the fraud prevention plan will also be implemented.

Although the fraud prevention plan was not reviewed in the current financial year, mechanisms to record fraud were disseminated to the relevant officials. No cases were reported during the year under review since no fraud or corruption matters were reported.

10. MINIMISING CONFLICT OF INTEREST

In minimising conflict of interest in supply chain management, all companies tendered are screened to ensure that such companies are not controlled, run or owned by MEGA employees, either by associate or direct involvement.

11. CODE OF CONDUCT

Code of conduct is enshrined in the Human Resources policies and breach of the code is dealt with through MEGA's disciplinary procedures.

12.

Declaration of interest forms are circulated to SCM bid committee members from specification to adjudication where members are expected to declare if they have any interest with regard to the tender in question, and where interest is declared, the conflicted member/s is recused from participation.

HEALTH SAFETY AND ENVIRONMENTAL ISSUES

MEGA is committed to operating a best practice yet proportionate health and safety management system, recognising its importance for enabling an efficient organisation, by minimising unnecessary losses and liabilities.

MEGA is also committed to annually reporting its health

and safety performance and its plans for proactive development of strategic health and safety management.

During 2012 to 2013, due to challenges faced by the entity there has not been any improvement on this area, however, the matter was part of the areas that were prtoritised in terms of the turn-around strategy.

13. COMPANY /BOARD SECRETARY

The Company Secretary, together with other assurance functions, monitors MEGA's compliance with the requirements of the PFMA, Companies Act No.71 of 2008

14. SOCIAL RESPONSIBILITY

During 2012 to 2013, due to challenges faced by the entity there has not been any improvement on this area,

(as amended), King Ill Report on Code of Good Governance, MEGA ACT No:1 of 2010 and other relevant legislation and reports to the Board in this regard.

however, the matter was part of the areas that were prioritised in terms of the turn-around strategy.

15. AUDIT COMMITTEE REPORT

We are pleased to present our report for the financial year ended 31 March 2013.

Audit Committee Responsibility The Audit Committee reports that it has complied with its responsibilities arising from Section 55 of the Public Finance Management Act and Treasury Regulation 3.1 .13. The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein, except that we have not reviewed changes in accounting policies and practices.

The Effectiveness of Internal Control Our review of the findings of the Internal Audit work, which was based on the risk assessments conducted in the public entity revealed certain weaknesses, which were then raised with the public entity.

The following were areas of concern:

• From the Internal Audit Reports presented to BARCC, we have identified that there are certain control deficiencies; however, management has put in place processes to address those deficiencies. However the appointment of a service provider for the turnaround strategy should address these control deficiencies.

• BARCC has during the period under review identified and raised with management IT systems. Notably, BARCC raised the issue of inefficient Debt Collection System, Loans Management Systems and general financial management system.

• BARCC has during the period under review, identified and raised the issue with management regarding the apparent poor status of the organization's asset register. As at the time of this BARCC report management had instituted a process initiating asset reviews. BARCC will continue to monitor this process for improvements.

The following internal audit work was completed during the year under review:

• Audits as per the Internal audit operational plan

• Adhoc Audits as mentioned within the internal audit operational plan

• Verification and confirmation of performance information

In-Year Management and Monthly/Quarterly Report The public entity has submitted monthly and quarterly reports to the Executive Authority.

Evaluation of Financial Statements We have reviewed the annual financial statements prepared by the public entity.

Auditor's Report We have reviewed the public entity's implementation plan for audit issues raised in the prior year and we are satisfied that the matters have been adequately resolved except for the following:

§BARCC reports that there are still outstanding actions to address other material findings of the AGSA audit

The Audit Committee concurs and accepts the conclusions of the external auditor on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the auditor.

Adv. JL Mothibi Chairperson of the Audit Committee Mpumalanga Economic Growth Agency

PART HUMAN RESOURCE MANAGEMENT

1. INTRODUCTION

The department is a division of Corporate Services. All functions of HR are performed internally except for labour relations which is partially outsources. One of the key priorities of the division was to re-view all policies and recognition of the organized labour. We manage to review 21 Human Resources Policies and they were all approved by the Board. A recognition agreement was also signed with organized labour. The placement of staff on the transitional organogram was finalized on the third quarter of the financial thus a performance management system was not implemented.

An organogram which will ensure effective delivery of services as per our mandate is being developed and will assist in developing a Human Resources strategy and plan.

2. HUMAN RESOURCE OVERSIGHT STATISTICS

Personnel Cost by programme

Programme Total Expenditure Personnel Personnel exp. • a No. of far the .,tlty Exl*ldlbn % of tollll exp. emplo,_a

R'OOO R'OOO

CEO's office 10,947 8,926 82 12

Corporate Services 42,267 13,904 33 36

Special Projects 1,707 202 12

Trade and investment 8,748 6,597 75 12

Finance 81,452 12,500 15 22

Property Management and Development 95,141 13,188 14 42

Enterprise Business 14,095 10,686 76 16

Business Development: Agriculture 36,904 26,870 73 70

Business Development: Housing 9,841 5,059 51 7

TOTAL 301,102 97,932 33 217

2. HUMAN RESOURCE OVERSIGHT STATISTICS CONTINUED

Personnel cost by salary band

Level Personnel Expenditure % of personnel exp. to No. of emplOyeeS R'OOO total personnel c011t

Top Management 11,878 13 9

Senior Management 20,741 22 25

Professional qualified 36,154 38 64

Skilled 14,792 16 51

Unskilled 10,457 11 68

TOTAL 94,022* 100 217

*Board fees and leave pay provision is not included in Personnel cost by salary band.

Performance Rewards

Performance incentives were not paid during the period under-review as there was no proper system to administer the pay of performance incentives.

Training Costs

Dlrectoratef PeNonnel Training Training Expenditure as No. of employees Average training BuslneuUnn Expenditure Expenditure a % of Personnel Cost. tralrwd c011t per employee

R'OOO R'OOO R'OOO

Office of the CEO 8,926 34 0 2 17

Corporate Services 13,904 502 4 8 63

Special Projects 202 - 0 0 0

Trade, Exports and Investments 6,597 - 0 0 0

Finance 12,500 3 0 1 3

Property Management and 13,188 3 0 1 3 Development

Enterprise Business 10,686

Business Development: 26,870 39 0 2 20 Agriculture*

Business Development: Housing 5,059

TOTAL 97,832 '581 0 14 108

*Training under Business Development: Agriculture was sponsored by the Department of Economic Development, Environment and Tourism (DEDET).


Employment and vacancies

Programme 201312014 Approved 2012fl013 201312014 Vacancy rate In % Posta No. of Employees VllC*Ides

CEO's office 3 2 1 33

Risk 1 0 1 100

Corporate Planning 2 1 1 50

Board Secretary 4 4 0 -Internal Audit 3 3 0 -Corporate Services 42 36 6 14

Special Projects 2 2 0 -Trade, Exports and Investment 13 12 1 B

Finance 28 22 6 21

Property Management and Development 53 42 11 21

Business Development (incl CEO of former 108 93 15 14 MHFCO)

TOTAL 259 217 42 16

Programme 201312014 Approved Posta 201212013 Approved Posta 201312014 v~ "" at vacancies

Top Management 9 10 1

Senior Management 25 30 5

Professional qualified 64 80 16

Skilled 51 65 14

Unskilled 68 74 6

TOTAL 217 259 42 16%

MEGA was operating on a transitional organogram which was not inline with the mandate of the entity. The process of developing a business model which is inline with the mandate of the new entity has commenced. The business model will inform the functions required thus the organogram with clear job descriptions will be developed.


Employment changes

Provide information on changes in employment over the financial year. Turnover rates provide an indication of trends in employment profile of the public entity.

Salary Band Employment at beginning Appointments Terminations Employment at end of the of period perlacl

Top Management 13 1 5 9

Senior Management 24 4 3 25

Professional qualified 64 1 2 63

Skilled 55 4 51

Unskilled 73 4 69

TOTAL 229 6 18 217

Reasons for staff leaving

Reason Number '% of total no. of atatl' leevlng

Death 2

Resignation 6

Dismissal

Retirement 5

Ill health 1

Expiry of contract 4

Other

Total 18 18%

A retention strategy has been developed to address the filling of critical positions.

Labour Relations: Misconduct and disciplinary action

There were no disciplinary actions held during the period under-review


Employment Equity status

LEVEL MALES FEMALES Total

Black ColouniCI Indian Whit. Black ColouniCI Indian I

Whit.

Top Management 6 2 1 9

Senior Management 14 1 2 7 1 25

Professional qualified 37 1 5 17 1 1 2 64

Skilled 20 1 1 24 3 2 51

Unskilled 30 38 68

TOTAL 107 2 1 10 87 4 1 5 217

TOTAL PER GENDER 120 97

Disabled Staff Targets were not set for the period under-review because MEGA was operating on a transitional organogram.

PART FINANCIAL INFORMATION

1. ACCOUNTING OFFICER•s STATEMENT OF RESPONSIBILITY FOR ANNUAL FINANCIAL STATEMENTS

Statement of Responsibility for the Annual Financial Statements for the year ended 31 March 2013

The Accounting Authority is responsible for the preparation of the public entity's annual financial statements and for the judgements made in this information.

The Accounting Authority is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the annual financial statements.

The Mpumalanga Economic Growth Agency's annual financial statements for the year ended 31 March 2013 1'\ilve been audited by the external auditors and their report is presented on page 74 . •

llle Annual Financial Statements of the public entity set out on page 75 to page 126. have been approved.

In my opinion, the financial statements fairly reflect the ~==::t:~~.., ..... . operations of the public entity for the financial year ended 31 March 2013.

The external auditors are engaged to express an independent opinion on the AFS of the public entity.

e Officer

2. REPORT OF THE CHIEF EXECUTIVE OFFICER

General financial Review of the Public entity.

The Agency has experienced growths in the revenue in the financial period ending 31 March 2013 as a result of moderate economic growth experienced in the country coupled with general increases in municipal rates. This has therefore seen an increase in the operating profit in the current financial year. The financial results of the Agency for the financial period ending 31 March 2013 have been negatively affected by unfavourable fair value adjustments in the current period as a result of extensive valuation process which was undertaken in the current financial period, to value the assets owned by the Agency. This process has resulted in a decrease in the fair value of the Investment property held by the Agency and as a result, the entity has recorded a total comprehensive loss in the current financial year.

Audit report matters in the previous year and how would be addressed.

The Agency has received an extensive list of audit report matters as a result of the prior period audit and we have been actively committed to rectify these matters throughout the current period. We have also enlisted the assistance of external consultants in the current period in an attempt to rectify the shortcomings identified in the prior period audits.

These shortcomings included the valuation, completeness, existence and rights to Investment property, Property, plant and equipment as well as Biological assets. In the 2013 financial period, the Agency has appointed an external valuator to assist in ensuring that these matters were addressed in the current period.

In the prior period, the merger of the three Development entities, namely: Mpumulanga Agricultural Department Corporation (MADC); Mpumulanga Economic Growth Agency (MEGA) and Mpumulanga Housing Finance Company (MHFCo) resulted in certain operational

challenges and the consolidation of the systems and financial records of these former entities resulted in the shortcomings identified as per the prior period audit report. We believe that we have addressed a majority of these operational challenges in the current period.

We have also had a shortage of key personnel in the prior period and as a result certain key operational areas were not managed in a manner deemed appropriate. In the 2013 financial period we have managed to fill a majority of these key personnel areas to ensure that a more appropriate and active control environment was established and will be maintained for future periods.

Events after the Reporting Period

Damaged property

Subsequent to the current year under review, one of the entity's major investment properties was severely damaged by fire on the 28th April 2013. The property in question is a packing house situated at the Tekwane Citrus farm. At this stage the value of the damage has not been assessed. The carrying value of the property amounts to R 2 938 320.

An insurance claim was instituted with MEGA's insurers, lndwe Risk Services on the 3rd May 2013. Property transfer

Furthermore, following a meeting held between MEGA and Mpumalanga Regional Training Trust (MRTT), it was confirmed that an agreement had been reached to transfer Siyabuswa Factiory and Erf 61, Erf 62 and Erf 63 Ekandustria to MEGA from MRTT worth R 5 283 333. The properties were allocated to MRTT when MADC was dismantled and subsequent allocation of its assets to four new Mpumalanga Government entities, one of which was the Mpumalanga Economic Empowerment Corporation (MADC). The properties were not registered in Mpumalanga Regional Training Trust (MATT's) name.

2. REPORT OF THE CHIEF EXECUTIVE OFFICER CONTINUED

Insurance payouts

An Insurance payout to an amount of R 6 ooo ooo relating to a burned down building that occurred in the 2008 financial year was received in April 2013.

Economic Viability of the Entity

Sources of Funding

The entity is depended on funding from the Government on an annual basis to carry out its core functions as mandated in its shareholders compact. This funding excludes special funding earmarked for certain projects that are done on an adhoc basis by MEGA.

Even though depended substantially on Government funding, MEGA operates like a self-sustained entity with substantial cash resources tied up debtors, of which the entity is embarking to liquidate in the preceding reporting period to be able to fund some of the self-initiated ad hoc projects.

Social and Economic Outreach

Supply Chain Management:

We have concluded one (1) unsolicited bid proposal for the year under review. Other five (5) bids which were advertised during the year under review are to be concluded during the current financial year. SCM policy has been approved and procedures are in place. The processes are there, however adherence to the processes is encouraged and systems are currently implemented. A consulting entity has been appointed to assist with a turn-around strategy for SCM.

SCM Challenges involved are as follows:

• Lack of personnel to complete the SCM structure: More personnel with the relevant knowledge and skill are to be employed.

• Lack of knowledge and skill regarding the SCM processes: In house training is being conducted.

• Merger of entities leading to contracts not being properly managed: A contract management division to be set-up in order to manage contracts properly.

With the clearly identifiable public outreach programmes bY--=~ the entity categorised under agriculture, housing and business development, funding has been approved to an amount of R 48 300 000. This funding is aimed, amongst other things, at cultivating emerging small businesses, human settlements and agricultural stimulation by previously disadvantaged individual.

However, even the funds have been approved these amounts have not been rolled out to the designated recipients due to funding constraints for the year under review as experienced by the entity.

e Officer

3. REPORT OF THE AUDITOR-GENERAL TO THE MPUMALANGA PROVINCIAL LEGISLATURE ON THE MPUMALANGA ECONOMIC GROWTH AGENCY

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the Mpumalanga Economic Growth Agency set out on pages 92 to 138, which comprise the statement of financial position as at 31 March 2013, the statement of comprehensive income, statement of changes in net equity and statement of cash flows for the year then ended, and the notes, comprising summary of significant accounting policies and other explanatory information.

Accounting authority's responsibility for the financial statements

2. The board of directors, which constitutes the accounting authority, is responsible for the· preparation and fair presentation of these financial statements in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP} and the requirements of the Public Finance Management Act of South Africa, 1999 (Act· No. 1 of 1999) (PFMA), the Division of Revenue Act of South Africa, 2012 (Act No.5 of 2012), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-general's responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit.

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

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

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

Retained income

6. The entity could not provide sufficient appropriate audit evidence to support the limitations in the prior year statement of comprehensive income and statement of financial position. Furthermore, the entity did not process corrections for some of the prior period errors identified in the statement of comprehensive income and financial position amounting to R31 619 112, which had an effect on the retained earnings closing balance.

7. The entity could not provide sufficient appropriate audit evidence to support some of the corrections made for prior period errors as disclosed in note 40 to the financial statements.

8. The entity's records did not permit the application of alternative audit procedures to obtain sufficient appropriate audit evidence for the reported limitations within this balance. Consequently, I could not confirm whether the retained earnings closing balance amounting to R1 490 646 717 disclosed in the statement of changes in equity fairly stated.

Other Financial Assets

9. In terms of the International Accounting Standards, lAS 1 Presentation of Financial Statements, an entity shall classify an asset as current when it expects to realise the asset within 12 months after the reporting period and all other assets as non-current. The entity could not provide sufficient appropriate audit evidence to support the allocation of other financial assets amounting to R99 289 093 between current and non-current.

1 0. In terms of the International Accounting Standards, lAS 39 Ananclallnstruments: Recognition and Measurement, if there is objective evidence that an impairment loss on loans and receivables has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The carrying amount of the asset shall be reduced either directly or through the use of an allowance account. The amount of the loss shall be recognised in profit or loss. Loans and receivables amounting to R20 323 510 that Indicated evidence of impairment were included In the financial assets closing balance without assessing the recoverability thereof. Consequently, financial assets amounting to R99 289 093 are overstated.

11. The entity did not provide sufficient appropriate audit evidence to support the disclosures made in terms of the International Financial Reporting Standards, IFRS 7 Financial Instruments: Disclosures. Consequently, I could not confirm whether the disclosure in note 34 to the financial statements is aligned to the I FRS 7 requirements.

12. The entity's records did not penn it the application of alternative audit procedures to obtain suffiCient appropriate audit evidence for the reported limitations within this balance. Consequently, I could not confirm whether the other financial assets closing balance

amounting to R99 289 093 disclosed in note 8 to the financial statements is fairly stated.

Fair value adjustments

13. The fair value adjustment to investment properties was not calculated correctly based on the valuators' methodology. Consequently, fair value adjustments amounting to R86 080 612 as disclosed in note 25 to the financial statements are understated by R82 957 414.Property plant and equipment

14. I could not trace the selected movable tangible assets from the floor to the asset register.

Therefore, movable tangible assets amounting to R6 281 220 included as part of property, plant and equipment disclosed in note 5 to the financial statements a1·e understated. I was unable to detennine the amount by which the movable tangible assets is understated.

15. I could not obtain supporting evidence for the selected leasehold properties to confirm whether all the risks and rewards associated with these properties had been transferred to the entity. Consequently, I was unable to confirm whether the leasehold property amounting to R9 71 0 000 included in property, plant and equipment disclosed in note 5 to the financial statements has been correctly classified as property, plant and equipment.

16. Due to the disclaimer of opinion Issued on the prior year's financial statements, I was unable to determine the extent of the effect of these limitations on the closing balance of property, plant and equipment.

17. The entity's records did not permit the application of alternative audit procedures to obtain sufficient appropriate audit evidence for the reported limitations within this balance. Consequently, I could not confirm whether the property, plant and equipment dosing balance amounting to R43 430 895 disclosed in note 5 to the financial statements Is fairly stated.

3. REPORT OF THE AUDITOR-GENERAL TO THE MPUMALANGA PROVINCIAL LEGISLATURE ON THE MPUMALANGA ECONOMIC GROWTH AGENCY CONTINUED

Trade and other receivables

18. In terms of the International Accounting Standards, lAS 39 Financial Instruments: Recognition and Measurement, if there is objective evidence that an impairment loss on receivables has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The carrying amount of the asset shall be reduced either directly or through the use of an allowance account. The amount of the loss shall be recognised in profit or loss. Receivables amounting to R29 087 337 that indicated evidence of impairment were included in the trade and other receivables closing balance without assessing the recoverability thereof. Consequently, trade and other receivables amounting to R55 063 144 are overstated.

Commitments

19. The entity did not provide sufficient audit evidence to support commitments amounting to R5 967 043 as disclosed in note 30 to the financial statements. The entity's records did not permit the application of alternative audit procedures to obtain sufficient appropriate audit evidence for the reported limitations within this balance. Consequently, I could not confirm whether the disclosed commitments are fairly stated.

Value added tax (VAT) payable

20. Section 17(1) of the VAT Act of South Africa, 1991 (Act No. 89 of 1991) allows for full input VAT to be claimed by VAT vendors supplying both taxable and exempt supplies, provided the portion of the taxable supplies is 95% or more of total supplies. However, where the taxable supplies are less than 95% of total supplies, the vendor should apportion the input VAT between taxable and exempt supplies using their turnover as a basis of apportionment.

21 . The entity did not determine the permissible input tax

deduction allowed in terms of section 17(1) of the VAT Act. Due to the limitation of scope on the prior year revenue amount, I was unable to confirm whether input VA Twas claimed in compliance with the said requirements. Consequently, I am unable to confirm whether the VAT payable amounting to R3 636 543 included in trade and other payables disclosed in note 18 to the financial statements is a true reflection of the amount owed to the South African Revenue Service.

Investment revenue

22. The interest earned on other financial assets and trade receivables was not calculated correctly based on the signed agreements. Consequently, investment revenue amounting to R4 249 294 disclosed in note 24 to the financial statements is understated by

R10 677 095.

Qualified Opinion

23. In my opinion, except for the possible effects of the matters described in the basis for qualified opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of the Mpumalanga Economic Growth Agency as at 31 March 2013 and its financial performance and cash flows for the year then ended, in accordance with

the SA Statements of GAAP and the requirements of the PFMA and DoRA.

Emphasis of matter

24. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Restatement of corresponding figures

25. As disclosed in notes 39 and 40 to the financial statements, the corresponding figures for 31 March 2012 have been restated as a result of errors discovered during the year ended 31 March 2013 march in the financial statements for the year ended 31 March 2012.

REPORT ON THE FINANCIAL STATEMENTS

26. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

Predetermined obJectives

27. I performed procedures to obtain evidence about the usefulness and reliability of the information in the report on predetermined objectives as set out on pages 23to 58 of the annual report.

28. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability. The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury's annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well defined, verifiable, specific, measurable and time bound) and relevant, as required by the National Treasury's Framework for managing programme performance information (FMPPI).

29. The reliability of the information in respect of the selected programmes is assessed to determine whether it adequately reflects the facts (i.e. whether it is valid, accurate and complete).

30. The material findings are as follows:

Reliability of Information

31. The FMPPI requires that institutions should have appropriate systems to collect, collate, verify and store performance infom1 ation to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. The information presented with respect to programme 3: property development and management and

programme 5: trade and investment was not reliable when compared to the source information and evidence provided. This was due to a lack of standard operating procedures for the accurate recording of actual achievements.

Addition maHer

32. I draw attention to the matter below. This matter does not have an impact on the audit findings on predetermined objectives reported above.

Achievement of planned targets

33. Of the total number of 98 targets planned for the year, 67 were not achieved during the year under review. This means that 68% of the total planned targets were not achieved during the year under review. This was as a result of the entity not considering relevant systems and evidential requirements during the annual strategic planning process.

Compliance with laws and regulations

34. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key applicable laws and regulations as set out in the general notice issued in terms of the PAA are as follows:

Annual financial statements, performance report and annual report

35. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and were not supported by full and proper records, as required by section 55(1)(a) and (b) of the PFMA. Material misstatements of non-current assets, current assets, liabilities, revenue and disclosure items identified by the auditors in the submitted financial statements were subsequently corrected and the supporting records provided, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a qualified audit opinion.

Asset and liability management

36. Proper control systems to safeguard and maintain assets were not implemented, as required by sections 50(1 )(a) and 51 (1 )(c) of the PFMA.

3. REPORT OF THE AUDITOR-GENERAL TO THE MPUMALANGA PROVINCIAL LEGISLATURE ON THE MPUMALANGA ECONOMIC GROWTH AGENCY CONTINUED

Procurement and contract management

37. Sufficient appropriate audit evidence could not be obtained that goods, works and services had been procured through a procurement process that was fair, equitable, transparent and competitive, as required by section 51 (1 )(a)(iii) of the PFMA.Revenue management

38. The accounting authority did not take effective and appropriate steps to collect all money due, as required by section 51 (1)(b)(i) of the PFMA and Treasury Regulation 31.1.2(a) and 31.1.2(e).

Expenditure management

39. The accounting authority did not take effective steps to prevent irregular as well as fruitless and wasteful expenditure, as required by section 51 (1 )(b)(ii) of the PFMA.

Strategic planning and performance management

40. In terms of section 51(1)(a)(i) of the PFMA, the accounting Authority must ensure that the public entity has and maintains effective, efficient and transparent systems of financial and risk management and internal control. However, the entity did not have and maintain an effective and efficient system of internal control regarding performance management, which described and represented how the department's processes of performance monitoring, measurement, review and reporting should be conducted, organised and managed.

Internal control

41. I considered internal control relevant to my audit of the financial statements, report on predetermined objectives and compliance with laws and regulations. The matters reported below under the fundamentals of internal control are limited to the significant deficiencies that resulted in the basis for the qualified opinion, the findings on the report on predetermined objectives and

the findings on compliance with laws and regulations included in this report.

Leadership

42. Oversight responsibility was not adequately exercised regarding financial and performance reporting and compliance as well as related internal controls.

43. The entity approved and communicated its policies late in the financial year and therefore these policies did not enable and support the understanding and execution of internal control objectives, processes and responsibilities throughout the financial year.

44. The entity did not adequately develop and monitor the implementation of action plans to address internal control deficiencies.

45. Key positions were found to be vacant and acting allowances were paid to employees for a period exceeding 12 months.

Financial and performance management

46. The entity did not implement proper record keeping in a timely manner to ensure that complete, relevant and accurate information was accessible and available to support financial and performance reporting.

47. The entity did not implement controls over the daily and monthly processing and reconciling of transactions.

48. The entity did not prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information.

49. Non-compliance with laws and regulations could have been prevented had compliance been properly reviewed and monitored.

Governance

50. A risk management strategy was not implemented to ensure that deficiencies in internal controls were responded to in a timely manner.

51. The audit committee did not ensure that the annual audit plan for the internal audit function was approved on time.

OTHER REPORTS

INVESTIGATIONS

Investigations in progress

52. An investigation is being conducted into a payment to an incorrect supplier. The investigation was still ongoing at the reporting date.

Nelspruit

20 August 2013

MPUMALANGA ECONOMIC GROWTH AGENCY

MPUMALANGA ECONOMIC GROWTH AGENCY Annual Financial Statements

for the year ended 31 March 2013

MPUMALANGA ECONOMIC GROWTH AGENCY Annual Financial Statements for the year ended 31 March 2013

GENERAL INFORMATION

Country of Incorporation and domicile

Nature of business and principal activities

Registered office

Bankers

Auditors

Secretary

South Africa

MEGA is a Government Business Enterprise classified as a Schedule 3D entity

Registered office2 McAdam Street Nelspruit 1200

Postal addressPO Box 5838 Nelspruit 1200

ABSA Bank Limited Standard Bank Limited

Auditor-General South Africa

Ms. S P Morgan


INDEX

The reports and statements set out below comprise the annual financial statements presented to the shareholder:

Index

Accounting Authorities' Responsibilities and Approval

Accounting Authorities' Report

Statement of Financial Position

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Accounting Policies

Notes to the Annual Financial Statements

Operating expenses

Page

95

96

97

98

99

100

101 -110

111 -138

139


Accounting Authorities• Responsibilities and Approval

The directors are required in terms of the MEGA Act and the Public Finance Management Act 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 entity 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 (I FRS) where applicable as per the Accounting Standard Board (ASB).

The annual financial statements are prepared in accordance with South African GAAP, which incorporates some of the International Financial Reporting Standards (I FRS) where applicable as per Accounting Standard Board (AFS), Public Finance Management Act (PFMA) Act, and National Treasury Regulation and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

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

The directors are of the opinion, based on the information and explanations given by management, 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 directors have reviewed the entity's cash flow forecast for the year to 31 March 2014 and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the company's annual financial statements. The annual financial statements have been examined by the company's external auditors and their report is presented on page 3.

The annual financial statements and amendments that may be required after the report signing date is set out on page 6 to 42 which have been prepared on the going concern basis, were approved by the board on 31 May 2013 and were signed on its behalf by:

~~~ Es== ( "i\iirSJViiakazi

Chairperson of the Board


Accounting Authorities• Report

The directors submit their report for the year ended 31 March 2013.

1. Incorporation

MEGA was established when the MEGA Act, No 1 of 2010 came into effect on 1 April 2010.

2. Review of activities Main business and operations

Mega is a government business enterprise and operates principally in Mpumulanga, South Africa.

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

3. Going concern

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

4. Events after the reporting period

The Directors have documented events after the reporting period in Note 41

5. Directors' Interest In contracts

There were no directors' interests in any contracts during the year.

6. Directors

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

Name Nationality

Mr. S J Vilakazi (Chairperson) RSA

Adv. J L Mothibi RSA

Mr. D P Mahlangu RSA

Ms. P N Z Fakude-Nkuna RSA

Mr. J E Linda RSA

Ms. N B Ntshangase RSA

Mr. D N Mculu RSA

Ms. SAXulu RSA

Mr. A Bam RSA

Ms. H Ralinala RSA

Mr. P J Van Der Walt RSA

7. Secretary

The secretary of the entity is Ms. S P Morgan.

Business address

8. Auditors

2 McAdam Street

Nelspruit

1200

Changes

Appointed 01 April 2012











Auditor-General South Africa will continue in office in accordance with section 55 of the MEGA Act and the Public Finance

Management Act.


Statement of Financial Position as at 31 March 2013

Figures in Rand Notes 2013

Assets

Non-Current Assets 3 13 046 700 Biological assets 4 1 448 836 898 Investment property 5 43430 895 Property, plant and equipment 6 14194 Intangible assets 7 1 853 083 Investments in associates 8 67 224 720 Other financial assets

1 574 406 490

Current Assets Other financial assets 8 32 064373 Inventories 10 33 552 429 Trade and other receivables 11 55 063144 Cash and cash equivalents 12 52102 050

172 781 996

Total Assets 1 747188 486

Equity and Liabilities Equity Contribution by owners 14 29 208 140 Reserves 15 29 066 917 Retained income 1 490 646 717

1 548 921 774 Liabilities Non-Current Liabilities Other financial liabilities 16 66 043 374

Current Liabilities Other financial liabilities 16 32233114 Trade and other payables 18 84 585 311 Provisions 17 15 404 913

132223 338

Total Liabilities 198266 712

Total Equity and Liabilities 1 747188 486

2012

8 831 275 1 539132 934

43493 266 2

1 853 083 60193160

1 653503 720

98 778 760 33852 524 51 661 479 25456 920

209749 683

1 863253 403

29208140 26395 542

1 558 227 233

1 613 830 915

87762 579

42 230 579 105 741 759 13 687 571

161 659 909

249422 488

1 863253 403



Figures in Rand Notes

Revenue 20 Cost of sales 21 Gross profit Other income 22 Operating expenses

Operating profit (loss) 23

Investment revenue 24 Fair value adjustments 25 Finance costs 26

(Loss) profit for the year Other comprehensive income: (Loss) gain on property revaluation 28

Total comprehensive (loss) income for the year

2013

324 999 369 (81 354 062) 243 645 307

4423975 (229 119 436)

18 949846 4249 294

(86080 612) (4699 044)

(87 580 516)

2 671 375 (64909141)

2012

259 692105 (63 479501) 196 212 604

3 922 209 (215 714 373) (15 579560)

4463 738 687 794198 (6 332 379)

870345 997

20170 889 690 516 886


Statement of Changes in Equity

Figures in Rand Share capital Revaluation reserve

Opening balance as previously reported 29 208 140 6 224653 Adjustments Adjustment

Restated Balance at 01 April 2011 29208140 6 224653 Total comprehensive income for the year perviously reported 25 082 720 Total Comprehensive income adjustment Prior Year Adjustments (note:39) (4 911 831)

Balance at 01 April 2012 29208140 26 395542 Total comprehensive income (loss) for the year 2 671 375

Balance at 31 March 2013 29208140 29 066917 Note(s) 14 15

Retained income

929 612121

2 315 498

931 927 619

707 845 998 (37 500 000) (44 047 384)

1558226233 (67 580 516)

1490648717

Total equity

965044 914

2 315 498

967360 412

732 928 718 (37 500 000) (48 959215)

1 613 829 915 (64 909141)

1548921 n4


Statement of Cash Flows

Figures in Rand Note(s)

Cash flows from operating activities

Cash receipts from customers Cash paid to suppliers and employees Cash used in operations 29 Interest income Finance costs Net movement in financial assets

Net cash from operating activities

Cash flows from Investing activities

Purchase of property, plant and equipment 5

Cash flows from financing activities

Repayment of other financial liabilities Net cash from financing activities

Total cash movement for the year Cash at the beginning of the year

Total cash at end of the year 12

2013

357447 830 (357 632 639)

(184 809) 4249 294

(4699 044) 59 682 827

59 048268

(686 468)

(31 716 670) (31 716 670)

26 645130 25456 920

52102 050

2012

263053 586 (283 049 467)

(19 995 881) 4463 738

(6 332 379) 14 722 539

(7141 983)

(289 740)

16637190 16 637190

9205 467 16 251 453

25456 920


Accounting Policies

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with South African GMP, which incorporates some of the International Financial Reporting Standards, (I FRS), and the MEGA Act and the Public Finance Management Act. The annual financial statements have been prepared on the historical cost basis, adjusted by revaluation of investment properties and financial instruments and incorporate the principal accounting policies set out below. The Financial Statements are presented in South African Rands.

These accounting policies are consistent with the previous year.

1.1 Combined annual financial statements

Business combinations

The MEGA Act, Act no 1 of 2010, effective from 1 April2010 merged the former Mpumalanga Economic Growth Agency, Mpumalanga Agriculture Development Corporation and Mpumalanga Housing Finance Company Ltd. The merger was successfully concluded as per the Premier's Proclamation Gazetted on 31 March 2012.

Pending the merging of the accounting and financial systems of the Individual entitles, It was still separately in operation at 31 March 2012. These accounting systems were merged as at 31 March 2013. Fundamental accounting principles require representation of substance above form, therefore the annual financial statements incorporate the financial performance and state of affairs of each entity, prepared as a combined set of annual financial statements.

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 are 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 and Loans and receivables

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

The impairment for trade receivables 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 defauHs on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.

Allowance for slow moving, damaged and obsolete stock

An allowance for stock to write stock down to the lower of cost or net realisable value. Management have made estimates of the seiling price and direct cost to sell on certain inventory items. The write down is included in the operating profit note.

Impairment testing

The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets.

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 17 - Provisions.

Property, plant and equipment

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.


Accounting Policies

1.3 Biological assets

An entity shall recognise a biological asset or agricultural produce when, and only when: • the entity controls the asset as a result of past events; • it is probable that future economic benefits associated with

the asset will flow to the entity; and

• the fair value or cost of the asset can be measured reliably.

Biological assets are measured at their fair value less costs to sell.

The fair value of the vine is based on the combined fair value of the land and the vines. The fair value of the raw land and land improvements is then deducted from the combined fair value to determine the fair value of the vines.

A gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell is included in the Statement of Financial Performance for the period in which it arises.

Where market determined prices or values are not available, the present value of the expected net cash inflows from the asset discounted at a current market-determined rate is used to ' determine fair value.

An unconditional government grant related to a biological asset measured at its fair value less costs to sell is recognised as income when the government grant becomes receivable.

Where fair value cannot be measured reliably, biological assets are measured at cost less any accumulated depreciation and any accumulated Impairment losses.

1.4 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 r~ment 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.

1.5 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 entity; 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 is carried at revalued amount being the fair value at the date of revaluation less any ' subsequent accumulated depreciation and subsequent accumulated impairment losses.

Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

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.

Any increase in an asset's carrying amount, as a result of a revaluation, is recognised to other comprehensive income and accumulated in the revaluation surplus In equity. The increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.


Accounting Policies

1.5 Property, plant and equipment (continued)

Any decrease in an asset's carrying amount, as a result of a revaluation, is recognised in profit or loss in the current period. The decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in the revaluation surplus in equity.

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.

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings as the asset is used. The amount transferred is equal to the difference between depreciation based on the revalued carrying amount and depreciation based on the original cost of the asset.

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

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

hem Land

Plant and machinery Furniture and fixtures Motor vehicles Office equipment IT equipment Leasehold improvements

Average useful life Infinite Buildings 20 years (5%) 5 years (20%) 6 years (16.6%) 5 years (20%) 10 years (10%) 3 years (33.3%) 20 years (5%)

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.

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.

1.6 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 carried at cost less any accumulated amortisation and any impainnent losses.

Item Useful life Computer software 3 years (33.3%)

1.7 Investments in subsidiaries

Investments in subsidiaries are carried at cost less any accumulated impainnent. The cost of an investment in a subsidiary is the aggregate of:

• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the entity; plus

• any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.8 Investments in associates

An investment in an associate is carried at cost less any accumulated impainnent.

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for inaccordance with I FRS 5. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate.


Accounting Policies

1.7 Investments In subsidiaries (continued)

When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

1.9 Financial instruments

Classification

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

• Loans and receivables

• Available-for-sale financial assets

• Financial liabilities measured at amortised cost

Classification depends on the purpose for which the financial instruments were obtained I 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 entity becomes a party to the contractual provisions of the instruments. The entity 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-forsale 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.

Subsequent measurement

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

Available-for-sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is not determinable, which are measured at cost less ~umulated impairment losses.

q.ains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in equity until the asset is disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends received on available-tor-sale equity instruments are recognised in profit or loss as part of other income when the entity's right to receive payment is established.

Changes in fair value of available-for-sale financial assets denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost and other changes in the carrying amount. Translation differences on monetary items are recognised in profit or loss, while translation differences on non-monetary items are recognised in other comprehensive income and accumulated in equity.

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

Derecognltlon

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the entity 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 entity 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.


Accounting Policies

1.9 Financial Instruments (continued)

lmpainnent of financial assets

At each reporting date the entity 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 entity, 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-tor-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 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.

Where financial assets are impaired through use of an allowance acx:ount, 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 acx:ount. Subsequent recoveries of amounts previously written off are credited against operating expenses.

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 forestimated 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 acx:ount, 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 acx:ount 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.

Cesh and cash equivalents

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.


Accounting Policies

1.9 Financial Instruments (continued)

I 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 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 entity has the positive intention and ability to hold to maturity are classified as held to maturity.

1.10 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 -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.

1.11 Inventories

Inventories are measured at the lower of cost and net realisable value on the first-in-first-out basis.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and

the estimated costs necessary to make the sale.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used for all inventories having a similar nature and use to the entity.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.12 Non-current assets held tor sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale (or disposal group) are measured at the lower of its carrying amount and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are recognised in profit or loss.


Accounting Policies

1.13 Impairment of assets

The entity 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 entity estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the entity also: Y 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. Y 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.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order: Y first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit and Y then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have

decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.14 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

1.15 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 contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the entity's obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.


Accounting Policies

1.16 Provisions and contingencies

Provisions are recognised when:

• the entity 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 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

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of:

• the amount that would be recognised as a provision; and

• the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 31.

1.17 Government grants

Government grants are recognised when there is reasonable assurance that:

• the entity 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).

Repayment of a grant related to income is applied first against any un-amortised deferred credit set up in respect of the grant To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.

Repayment of a grant related to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.


Accounting Policies

1.18 Revenue

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the entity; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

When the outcome of a transaction invoMng the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the entity;

• the stage of completion of the transaction at the end of the reporting period can be measured reliably; and

• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable.

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.

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

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

Service fees included in the price of the product are recognised as revenue over the period during which the service is performed.

1.19 Cost of sales

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

Contract costs comprise:

• costs that relate directly to the specific contract;

• costs that are attributable to contract activity in general and can be allocated to the contract; and

• such other costs as are specifically chargeable to the customer under the terms of the contract.

1.20 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.


Accounting Policies

1.21 Translation of foreign currencies

Foreign currency transactions

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

At the end of the reporting period:

• foreign currency monetary items are translated using the closing rate;

• non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and

• non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

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

When a gain or loss on a non-monetary item is recognised to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

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

1.22 Fruitless, wasteful and irregular expenditure

Fruitless and wasteful expenditure is recognised in profit or loss in the period during which it occurs.



Figures in Rand Notes

2. New Standards and Interpretations

2.1 Standards and interpretations effective and adopted in the current year

Standard/Interpretation:

lAS 27 Separate Financial Statements (2011) lAS 28 Investments in Associates and Joint Ventures (2011) I FRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IFRS 10 Consolidated Financial Statements Amendments to lAS 12 - Deferred Tax: Recovery of Underlying Assets (Amendments to lAS 12) Amendments to lAS 1 - Presentation of Items of Other Comprehensive Income Amendments to I FRS 1 - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Amendments to lAS 19 Employee Benefits (2011) Amendments to I FRS 7 Disclosures- Offsetting Financial Assets and Financial Liabilities Amendments to I FRS 1 - Government Loans Amendments to Annual Improvements 2009-2011 Cycle Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance Amendments to I FRS 7 Financial Instruments: Disclosures

2.2 Standards and Interpretations not yet effective

Standard/Interpretation:

• IFRS 9 Financial Instruments (2009)

• IFRS 9 Financial Instruments (2010)

• Investment Entities (Amendments to IFRS 10, IFRS 12 and

lAS 27)

• Offsetting Financial Assets and Financial Liabilities

(Amendments to lAS 32)

2.3 Impact of new standards

Effective date: Years beginning on or after

01 January 2015

01 January 2015

1 January 2014

2013 2012

Effective date: Years beginning on or after 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2012 1 July2012 1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013

1 July 2011

Management have assessed the impact of the newly issued Standards that are not yet effective. The impact of these new Standards, together with the amendments to original Standards is not considered to be material. These new Standards and amendments to original Standards will be adopted on their respective effective dates.



3. Biological assets

Costs/ Valuation

Lemon orchard Tekwane 9 832 750 Grapevines - Loopspruit 3 213 950

Total 13 046700

Reconciliation of biological assets 2013

Lemon orchard Tekwane Grapevines - Loopspruit

2013

Accumulated Carrying depreciation value

9 832 750 3213950

13046 700

2012

Costs/ Accumulated Valuation depreciation

7 384 375 1446 900

8831275

Gains or Opening losses arising balance from changes in

fair value

7 384375 2 448375 1 446 900 1 767050

Carrying value

7 384375 1446 900

8 831275

Total

9 832 750 3 213 950

8 831275 4 215425 13 046700


Lemon orchard Tekwane Grapevines - Loopspruit

Non - Flnanclallnformantlon

Quantities of each biological assets:

Lemon orchard Tekwane7 384 37 Grapevines - Loopspruit

Information on biological assets:

Opening balance

7 384 375 1 446 900

8831 275

2013

118 18

136

Total

7 384375 1 446900

8 831275

2012

118 18

136

Biological assets consist of lemon orchards and grapevines, also known as MEGA's own agri-business. Tekwane estate, with the lemon orchard is situated in the Mbombela district. Loopspruit Estate, comprising grapevines, is situated on the banks of the Loopspruit river, 30 km's north of Bronkhorstspruit.

The Tekwane estate produced approximately 99.50 tonnes (2012: 97.55 tonnes) of lemon produce and the Loopspruit Estate produced approximately 3 900 tonnes (2012: 3 949 tonnes) of grape produce.

The effective date of the valuations was 31 March 2013 and were performed by independent, accredited valuers, Spectrum Valuation Services (Pty) Ltd based on open market value of the biological asset. The net produce value of biological assets were as follows:

Lemon orchard Tekwane

Grapevines - Loopspruit

2013

2 504 733

(233 665)

2012

1 732 358

234 795


Notes to the Annual Financial Statements Figures in Rand

4. Investment propeny

Investment property

Reconciliation of investment propeny- 2013 Opening balance

Investment property

Reconciliation of investment propeny- 2012

Investment property

Opening balance

857 247 787

2013


1448 836 898

Prior period Classified as error held for sale

(37 500 000) (41 600 000)

Carrying value

2012


1 448 836 898 1 539 132 934

Opening Transfers Fair Value balance adjustments

1 539132 934 (3429 000) (86 867 036)

Reclassified Other Fair Value to Investment changes, adjustments

propeny movements 41 600 000 2 922225 716 462 922

Carrying value

1 539 132 934

Total

1 448 836898

Total

1 539132 934



4. Investment property (continued)

Details of property

Industrial and commercial properties and infrastructure

- Ekandustria region - Siyabuswa region - Ehlanzeni region

Residential land and property

- Land : Sabia, Extension 10 - Residential houses

Details of valuation

950 034 363 214881013 1731n 121

1338092 497

16 658 500 97 514 901

114173 401

1069 047 474 176 561 709 259 845100

1505 454283

16 717 000 16 961 651

33 678651

The effective date of the valuations of the industrial and commercial properties and vacant land was perfonned on 1 December 2012 and is based on open market value for existing use. The effective date of the valuations of the infrastructure was 27 March 2013.

Valuations were performed by two independent, accredited valuers. Ndlala Mass Valuers (Pty) Ltd performed the valuation of the industrial and commercial properties and the land. IBP Construction Consultants (Pty) Ltd perfonned the valuation of the infrastructure. The valuers are not connected to the Agency and have recent experience in location and category of the investment property being valued.

Fair value of the residential houses are reviewed annually by management based on market prices. The date of the last review was 1 December 2012. The valuation of residential stands were perfonned by Ndlala Mass Valuers (Pty) Ltd, registered valuers. The date of these valuations are 1 December 2012 based on open market value for existing use.



5. Property, plant and equipment 2013 2012

Costs/ Accumulated Carrying Costs/ Accumulated Carrying Valuation depreciation value Valuation depreciation value

Land and buildings 11 625 000 (4090 426) 7 534574 4 463480 (2177120) 2 286360 Leasehold property 29 615101 29 615101 39 500349 39 500349 Plant and machinery 1146 703 (201 387) 945 316 6 670 879 (6 440 051) 230828 Furniture and fixtures 1 925 882 (48 121) 1 877 761 631 887 (506 931) 124 956 Motor vehicles 2 878 295 (489 297) 2388 998 2 955040 (2510514) 444526 Office equipment 483 542 (72 467) 411 075 10 175 957 (9 270 182) 905 775 IT equipment 795 762 (137 692) 658070 430390 (429 918) 472

Total 48470285 (5 039 390) 43430895 64 827982 (21 334 716) 43 493266

Reconciliation of property, plant and equipment- 2013

Opening Additions Disposals Revaluations Other Depreciation Total balance changes,

movements Land and buildings 2286 360 11 625 000 (2 286 360) (4 090426) 7 534574 Leasehold property 39 500 349 (8 953625) (931 623) 29 615101 Plant and machinery 230 828 915 675 (201187) 945316 Furniture and fixtures 124 956 1 800 926 (48121) 1 877 761 Motor vehicles 444 526 2 433 769 (489297) 2 388 998 Office equipmen 905 775 70233 (492 466) (72 467) 411 075 IT equipment 472 601 519 (35 413) 229184 (137 692) 658 070

43493 266 671 752 (35 413) 2 671375 1 669105 (5 039190) 43 430895



5. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment· 2012

Land and buildings Leasehold property Plant and machinery Furniture and fixtures Motor vehicles Office equipment IT equipment

Details of valuation

Opening balance

2437 324 9 546 642

381 156 296 816 584 458

1 578 567 19440

43493 266

Additions

116 921 172 819

289740

Disposals Revaluations Other Depreciation Total changes,

movements (150 964) 2 286360

26 395542 3 788 872 (230707) 39 500349 (150 328) 230828

(110 622) (61 238) 124 956 (256853) 444526

(10 684) 13349 (848276) 905775 (18 968) 472

(10 684) 26 395542 3 691 599 (1 717 334) 43 493266

The effective date of the valuations of the properties and movable assets was performed on 1 December 2012 and based on open market value for existing use. The effective date of the valuations of the infrastructure was 27 March 2013.

Valuations were performed by an independent, accredited valuers. Ndlala Mass Valuers (Pty) Ltd performed the valuation of the properties and movable assets. The valuers are not connected to the Agency and have recent experience in the location and categorisation of the property and movable assets being valued.

Detail of restrictions and pledges

None of the titles of Property, plant and equipment have been restricted or pledged as security for liabilities.



6. Intangible assets

Costs/ Valuation

Computer software


Computer software


Computer software

7. Investments in associates

Name of entity

Cementcor (Pty) Ltd KaNgwane Anthracite (Pty) Ltd Nkomati Anthracite (Pty) Ltd Thabiso Chemicals (Pty) Ltd Hi-veld Fruit Packers (Pty) Ltd

lmpainnent of investments in assocs

195 461

Underlying assumptions for the impairments

2013

Accumulated depreciation

(181 267)

Carrying value

14194

Opening balance

2

Opening balance

22391

% holding

2013 40.00% 40.00% 40.00% 22.00% 26.00%

2012


180 745 (180 743)

Additions Amortisation

14 716 (524)

Additions Amortisation

(22 389)

% Carrying holding amount2013

2012 40.00% 40.00% 492 628 40.00% 93180 22.00% 26.00% 1 853 083

2438 891 (585 808)

1 853 083

• Cementor (Pty) Ltd - The entity is no longer in operation and has ceased trading since 11 May 2004

Carrying value

2

Total

14194

Total

2

Carrying amount2012

351 642 492 628 93180

222 000 sn2ooo

6 931 450 (5 078367)

1 853 083

• Nkomati Anthracite (Pty) Ltd - The associate entity has had accumulated losses and thus an impairment of R93 180 has been raised against the investment

• Thabiso Chemicals (Pty) Ltd- The entity is no longer in operation and has ceased trading since 16 July 2010

• Hi-veld Fruit Packers (Pty) Ltd - Share of the associates profit accounted for as follows:

Associates' Accumulated Reserves to date as per Financial statements

Equity accounted at 26% shareholding

The carrying amounts of Associates are shown net of impainnent losses.

7127 242

1 853 083



Figures in Rand

8. Other financial assets

At fair value through profit or loss - designated Listed and unlisted shares

Loans and receivables Housing loans

The loans are all housing loans generally repayable over 20 years at 12% p.a. fixed over the term of the loan. These loans are covered by the properties of the debtors as collateral on default.

SMME Loans

The loans entail business capital funding and I or bridging finance over a maximum term of 5 years. Interest rates are capped around prevailing prime lending rates.

Agriculture agency and business loans

The loans are financing livestock and crops with repayment terms varying from 3 months to 8 years all at 8% p.a.

Equity loans

The loans consist of capital funding with participation in redeemable preference sharesover a maximum term of 5 years.

Loans and receivables (impairments)

Total other financial assets

Non-current assets At fair value through profit or loss- designated Loans and receivables

Current assets Loans and receivables

Financial instruments

2013

20185

159209 964

54487 267

9142 571

298 750 133 (199 481 225)

99268 908 99289 093

20185 67 204 535 67 224 720

32 064 373 99289 093

Valuation of the investments in the financial instruments of the following unlisted shares was based on the following:

Stellenbosch VIneyards

2012

976 734

161 752 301

51 238270

8 702 345

325 577124 (167 581 938)

157 995186 158 971 920

976 734 59 216426 60193160

98 778 760 158 971 920

6365 shares valued at R 2.91 each based on the net asset value of the companies last Annual Financial Statements dated 30 September 2012.



Figures in Rand

8. Other financial assets (continued)

KWV Holdings Limited

2013 2012

182 shares valued at R 9.1 0. This share price was derived from the share trading price as per the JSE indices as at 31 March 2013.

The entity has not reclassified any financial assets from cost or amortised cost to fair value, or from fair cost to fair value, or from fair value to cost or amortised cost during the current or prior year.

Reconciliation of provision for Impairment of available-for-sale financial assets

Opening balance Provision for impairment

167 581 938 42 907 941

210489 879

88 683692 78 898246

167 581 938

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. The entity does not hold any collateral, except for housing loans as security.

9. Financial assets by category

The accounting policies for financial instruments have been applied to the line items below:

2013

Other financial assets: Non-current Other financial assets: Current Trade and other receivables Cash and cash equivalents

2012

Other financial assets: Non-current Other financial assets: Current Trade and other receivables Cash and cash equivalents

10. Inventories

Work in progress Finished goods Consumables

Loans and receivables 67 224 720 32 064 373 55 063143

154352236

Loans and receivables 60 193160 98 778 760 51 661 479

210633399

Available-forsale

52102 050

52102 050

Available-forsale

25456 920

25456 920

32276 416 137152

1138 861

33552 429

Total

67 224 720 32 064373 55 063143 52 102 050

206 454286

Total

60 193160 98 778 760 51 661 479 25 456 920

236 090319

32 071743

1 780781

33 852524



Figures in Rand

11. Trade and other receivables

Trade receivable Other receivables Deposits Self insurance fund Department of Agriculture and Land Administration Provisions and impairments Impairments- Other

Reconciliation of provision for Impairment of trade and other receivables

Opening balance Provision for impairment

2013

113 737 368 57 610 434

581 825 80867

(62 083 617) (54 863 733)

51 661479

95163 666 27 783 683

122 947 349

2012

145 268 277

581 825 46485

928 558 (95 163 666)

51 661479

55 362 569 39 801 097

95163 666

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. The entity does not hold any collateral as security.

12. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand Bank balances Short-term deposits Other cash and cash equivalents

The entity has the following bank guarantees in issue as at 31 March 2013:

Beneficiary Eskom Eskom Eskom Eskom Astral Operations Ltd

13. Non-current assets classified as held for transfer

Expiration date 1 January 2030 1 January 2030 1 January 2030 1 January 2030 1 July 2030

2 346 51 325 239

774465

52102 050

Amount 800 2765 2890 1 600 1 000 000

57148 16 288 887 2 021 344 7 089 541

25456 920

In the prior period, MEGA was obliged to transfer vacant land which was classified as investment property to the relevant local authority at no compensation to the value of R 41 600 000 which was also classified as held for sale. This transfer was contingent on the construction of housing stands on this property which was to be erected in the period ending 31 March 2012. Due to financial constraints, no construction has taken place and thus these properties have not been transferred. The financial statements have thus been retrospectively adjusted to appropriately reflect the cease in classification of this non-current asset as held for sale.

Please note: The prior year asset classified as Held for sale has been reclassified to Investment property accordingly and included in income from continuing operations for all periods presented as per IFRS 5 paragraph 36.



Figures in Rand

14. Contribution by owners

Issued Capital grants

2013

29 208140

2012

29 208 140

This was contributions in the fonn of Capital Government Grants by parenting companies to establish the three former Mega entities prior to 2009 financial year.

15. Reserves

Opening balance Other comprehensive income Prior period errors

26 395 542 2 671 375

29 066 917

6224 653 25 082 720 (4 911 831}

26395 542



Figures in Rand

16. Other financial liabilities

Held at amortised cost Development Bank of Southam Africa - Housing loans

Repayable in bi-annual instalments of R 4,694,283 including capital and interest at 8% and 8,5% per annum. The loan is secured by notarial bond over housing loans as per note number 9.

Development Bank of Southam Africa - Trade and Investment

The loan has been restructured to be interest free and the capital to be repaid in equal monthly instalments R 350,775 with the final instalment payable in 2016. The loan is secured by guarantees from the Mpumalanga Provincial Govemment.

Development Bank of Southem Africa - Irrigation loans

Repayable in bi-annual instalments of R 237,785 including capital and interest at 10% per annum with the final instalment payable in 2014.

Development Bank of Southem Africa -Agency loans

Repayable in bi-annual instalments of 4,236,528 including capital and interest at rates varying from 8 to 13% per annum with the last instalments payable from 2014 to 2016.

Thaba Chweu Municipality Repayable as and when stands in Sabie, Extension 1 0 are sold. The loan is interest free.

Other financial liabilities

Mafisa loan repayable in equal montly instalments of R 1 200 000 each.

Non-current liabilities At amortised cost

Current liabilities At amortised cost

2013

45 333 775

12 613 674

441 988

12 827 456

4 816 364

22 243 231

98 276488

66 043 374

32 233114

98 276488

2012

55 905105

18 240 321

2 158 894

28118 553

4 816 364

20 753 921

129 993158

87 762 579

42 230 579

129 993158



Figures in Rand

17. Provisions

Reconciliation of provisions • 2013 Opening balance

Provision for bonuses 5 878144 Provision for leave pay 7 081 78872 Provision for Workmans' Compensation 7639

13 687 571

Reconciliation of provisions· 2012 Opening Additions balance

Provision for bonuses 3 604 058 324 822 Provision for leave pay 4 885157 3 519 826 Provision for Workmans' Compensation 727 639

9 216 854 3 844 648

2013 2012

Additions Utilised Total during the

year 6 020 299 (6 122 704) 5 775 739 3460 375 (1 640 628) 8 901 535

727 639

9480 674 (7 763 332) 15 404 913

Utilised Prior year Total during the error

year (1 059 305) 3 008 569 5 878 144 (1 323 195) 7 081 788

727 63913

(2 382 500) 3 008 569 687 571

Provision for bonuses consists of incentive bonuses not allocated and voluntary deductions held for certain members of staff which are paid out by the end of the annual cycle or on earlier when requested.

Leave pay is provided for on a monthly basis based on unused leave balances.

Provision for Workmans' Compensation is made on latest assessments and reviewed annually.

18. Trade and other payables

Trade payables Value added tax Accrued expenses Government projects Interest in arrears Deposits received Other payables

48 855808 3 636 543 1 609 733

27 065146

3 250 482 167 599

89 503 873 2 079 338 4 488 352 8 320490

17 429 1194 450

137 827

84 585 311 105 741 759



Figures in Rand

19. Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below:

2013

Other financial liabilities: Non-current Other financial liabilities: Current Trade and other payables Provisions

2012

Other financial liabilities: Non-current Other financial liabilities: Current Trade and other payables 1 Provisions

20. Revenue

Sale of goods Rendering of services Rental Income - Investment property Interest received (trading) Government grants received Dividends received (trading)

21. Cost of sales

Sale of goods Cost of goods sold

Rendering of services Cost of services

2013

Financial liabilities at

amortised cost

66 043 374 32 233114 84 585 310 15 404 913

198 266 711

Financial liabilities at

amortised cost

87 762 579 42 230 579

105 741 759 13 687 571

2012

Total

66 043 374 32 233114 84 585 310 15404913

15 404 913

Total

87 762 579 42 230 579

105 741 759 13 687 571

249 422 488 249 422 488

8 957 508 92 602 386 25 732 224 27 350 053

170 031 943 325255

324999 369

5 802114

75 551 948

81 354 062

9 514 444 68 712 289 30 871 640 21 333 314

129147 368 113 050

259 692105

7 818 300

55 661 201

63 479 501



Figures in Rand

22. Other income

Administration fees received Other income - housing and agriculture Interest received Sundry income Insurance Claim Electricity recovery Valuation Fees Bad debts recovered

23. Operating profit (loss}

Operating profit (loss) for the year is stated after accounting for the following:

Operating lease charges Premises Contractual amounts Motor vehicles Contractual amounts Equipment Contractual amounts

Depreciation on property, plant and equipment Employee costs Investment property expenses Defined benefit contribution expense

24. Investment revenue

Interest revenue Bank Loans to directors managers and employees Loans to beneficiaries

25. Fair value adjustments

Biological assets Investment property (Fair value model)

26. Finance costs

Non-current borrowings Interest paid (incorporated in fruitless and wasteful expenditure in note 36)

2013

20217 53528

4 016 301 165 000 22578 8956 3250

134145

4423 975

6 382 725

1 487 587

969 705 95 782 643

1 540 910 7 528 860

522 629

3 726 665

4249 294

4215425 (90 296 037)

(86 080 612)

4 122 136 576 908

4699 044

2012

233 541 552 944

2 598 024 6669

4298

526 733

3 922 209

6 523 212

327 610

2 360 771

1 717 335 94 927 015 4106 441 7 418 730

335 553

4128185

4463 738

8 831 275 678 962 923

687 794198

6 305 560 26 819

6 332 379



Figures in Rand

27. Auditors' remuneration

Fees Consulting

28. Other comprehensive income

Components of other comprehensive income- 2013

Movements on revaluation Loss on property valuation

Components of other comprehensive income- 2012

Movements on revaluation Gain on property revaluation Prior period error adjustment (note 39)

29. Cash used in operations

Loss before taxation Adjustments for: Depreciation and amortisation Other Property, plant and equipment adjustment Fair value adjustments Interest received Finance costs Loss on scrapping of Property, plant and equipment Non-cash movement in Property, plant and equipment Movement in associates Adjustment to Retained earnings as at 1 April2011 (SOCE) Prior period errors Movements in provisions Changes in working capital: Trade and other receivables Inventories Trade and other payables

2013

Gross Tax

2 671 375

Gross Tax

25 082 720 (4 911 831)

20 170 889

(67 580 516)

5 039 714 (1 669 105) 86 080 612 (4 249 294)

4 699 044 35413

1 717 342

(3 401 664) 300 095

(21 156 450)

(184 809)

2012

Net

2 671 375

Net

25 082 720 (4911831)

20170 889

670 345 997

1 739 724 (3 691 599)

(690 716 422) (4 463 738)

6 332 379 10684

(6 224 653) (727 185) 2 315 498

(44 047 384) 4 014 814

(560 728) 110 807

45 565 925

(19 995 881)



Figures in Rand

30. Commitments

Authorised capital expenditure

MEDIA24 Consulting Company Life after Gold Construction CC Afroshine Holdings

Already contracted for but not provided for

Authorised loans not yet paid out Approved tender amounts

Operating leases - as lessee (expense)

Minimum lease payments due - within one year - in second to fifth year inclusive

2013

16416 21452485

43147 12 718

5 967 043

4 563 716 2 089 688

6653404

2012

9 915 072 666 451

6 569 660 5115 734

11 685 394

Operating lease payments represent rentals payable by the entity for certain of its office equipment and properties. Leases are negotiated for an average term of seven years and rentals are fixed for an average of three years. No contingent rent is payable.



Figures in Rand

31. Contingencies

Sunn Masterbacht - Land claim

Sun Masterbacht has a land claim of against MEGA. Some property was sold to the plaintiff for R1 000 000 but the sale was subsequently cancelled by MEGA. The plaintiff seeks an order to enforce the contract whereby MEGA will transfer the property at the original amount.

Mr AM Sher- Funding dispute

MEGA has sued Mr AM Sher for defaulting on loan repayments in the past, which was unsuccessful. Mr AM Sher has subsequently lodged a counter claim for loss of profits amounting to R1 900 000 plus interest. MEGA is still awaiting a trial date.

G-Tech Electronics - ICT contract

G-Tech Electronics, an information technology contractor, initiated a claims of approximately R 5 000 000 and R 2 000 000 for alleged loss of income and amounts in arrear resulting from a verbal agreement. The cases have been joined and summons for R 7 000 000 was received by MEGA.

Twoline Trading - Loss of income

Twoline Trading lodged a claim of approximately R 1 300 000 for loss of rental income resulting from property bought from MEGA on which there was a long term lease agreement with rental far below market prices.

Advanced Irrigation - Outstanding payments

Advanced Irrigation lodged a claim during December 2010 for outstanding contract payments amounting to approximately R 11 000 OOO.ASummons has been received by MEGA in this regard.

Khabran Investments {pty) Ltd.

The plaintiff, Khabran Investments (Pty) ltd, is a consultant appointed by the former CEO and Chairperson. The claim constitutes payment amounting toR 707 176 for apparent services rendered. Summons was served and a plea was filed by MEGA.

2013 2012

Nosizwe Nokwe - Constructive Dismissal

The plaintiff, Nosizwe Nokwe, claimed an amount of R 1119 503.25 for a settlement for a constructive dismissal. This matter is currently being handled with the labour court

Marla Tshabangu - Unfair labour practice

The plaintiff, Maria Tshabangu, has been awarded a CCMA claim for unfair labour practice at an amount of R 260 094. This matter is currently under labour court review.

Hazel Nhlabathi - Pension Proceeds

Plaintiff has initiated a claim of R 703 898, for the plaintiffs share of her late husband's pension proceeds. A notice of intention to defend has been served and filed.

The aforementioned cases are still before the various courts and there were no hearing dates set as at the date of preparation of these annual financial statements. The finalisations of these cases are dependent on the court processes and the timing of the conclusion of these cases are uncertain.



Figures in Rand

32. Related parties

Relationships Mr GL Dladla (Key member of management) Mr TS Nobela (Key member of management) Mr JB Mahlangu (Key member of management) Mr GC Nel (Key member of management) Department of Sport Arts and Culture Department of Agriculture, Forestry and Fisheries Mr ZL Dlabazama (Family member of key member of management)

Related party balances

Mr ZL Dlabazama MrGJ Dladla MrTS Nobela Mr JB Mahlanngu MrGC Nel Department of Sport Arts and Culture Department of Agriculture, Forestry and Fisheries

Amounts received from (Paid to) related parties Mr ZL Dlabazama MrTS Nobela Mr JB Mahlangu MrGJ Dladla MrGC Nel

Related party transactions

Department of Sport Arts and Culture Department of Agriculture, Forestry and Fisheries Interest received - Department of Agriculture, Forestry and Fisheries

The Department Grants received

2013

2013 1 510 199 1 554429

193 868 926 344 743085

6 070454 22 243 231

(115 355) 14234 54395 20203 56924

6 911 760 23 871 271

781 962

207 040000

2012

2012 1 394 844 1 575 332

208102 980 740 800 008

97402

187 592

846 079

129147 368

All related party transactions entered into were made on terms equivalent to those that prevail in arm's length transactions.



Figures in Rand

33. Directors' emoluments

Non-executive

2013

Mr. S J Vilakazi (Chairperson) Adv. J L Mothibi Mr. D P Mahlangu Ms. P N Z Fakude-Nkuna Mr. J E Linda Ms. N B Ntshangase Mr. D N Mculu Ms. SAXulu Ms. H Ralinala Mr. P J Van Der Walt

2012

Mr. S J Vilakazi (Chairperson Interim Board 21/9/2011 - 31/312012) Ms. R Kalidass (Chairperson Permanent Boarcl1/4/2011 30/6/2011) Mr. E B Mabena Mr. D Manana-Mavuso Mr. V Z Ntshangase Mr. T M N Kgomo Mr. G J Mafereka Mr. Z E Mncube Adv. J L Mothibi Mr. D P Mahlangu Ms. P N Z Fakude-Nkuna Mr. J E Linda Ms. N B Ntshangase Mr. D N Mculu Ms. SAXulu

2013

Remuneration Other benefits*

139 344 17 533 46054 2017

111 184 72623 41133 4328 79672 39758 20163 3387 91 850 38357 91 301 14379 30093 1 315 10 623 1407

661417 195104

Remuneration other benefits*

78226 8869 210 175 11 256 56235 11 842 77 051 2 854

136 371 17652 82191 22 534 76322 6260

110 701 24417 37 962 4232 56154 32 327 26698 8222 36815 19570 25 799 18 572 53510 25674 53 701 10 487

1117 911 224 768

2012

Total

156 877 48 071

183 807 45461

119 430 23550

130 207 105 680 31 408 12 030

856 521

Total

87095 221431

68077 79905

154 023 104 725 82582

135 118 42194 88481 34920 56385 44371 79184 64188

1342 679



Figures in Rand

33. Directors' emoluments (continued)

Executive Officers

2013

Mr. J B Mahlangu (Acting CEO March 2012- November 2012) Adv. B M Mkhize (CEO Effective December 2012) Mr. B V Mqhum (CFO} Mr. G J Dladla Mr. P E Rabohale Mr. Z C Sibanda Mr. J S Marala Mr. M J Mkhonto Mr. P N Z Nqeto Mr. T S Nobela Mr. P J Velelo Mr. G C Nel Mr. S P Morgan Mr. S D Wiggins Mr. A L Scheepers

2012

Mr. J B Mahlangu (Acting CEO) Mr. B V Mqhum (CFO) Mr. G J Dladla Mr. P E Rabohale Mr. A L Scheepers Mr. J S Marala Mr. M J Mkhonto Ms. P N Z Nqeto Ms. S DWiggins Mr. T S Nobela Mr. P J Velelo Mr. S S Mahlangu

Directors and executive officers are all related parties as described in note 32.

* Other benefits comprise travel allowance and medical benefits

2013

Remuneration other benefits*

1106 092 303 518 552 557 102 831 911104 8692

1 448 324 228 786 261 411 4598 367 967 120416 208147 8000 450433 22930 973 286 195 126 972 561 96000 956 227 196104 892 514 277124 810 705 108 222 111 290 8000

1 035 973 106 727

11 058 591 1 787 074

Remuneration other benefits'*

1 219209 27 926 46557

2 075 728 1 332 110 109196 1 003 851 38455 1 030 048 13 649 1 175 364 11198 1 077 694 21234

983412 62 728 1 305 351 1605 1 140 133 37 585 1 150 756

13 540 213 323 576

2012

Total

11 409 610 655 388 919 796

1 677 110 266 009 488 383 216147 473 363

1168 412 1 068 561 1152331 1169 638

918 927 119 290

1142 700

12 845 665

Total

1 247135 46557

2 075 728 1 441 306 1 042 306 1 043 697 1186 562 1 098 928 1 046140 1 306 956 1 177 718 1150 756

13 863 789



Figures in Rand

34. Risk management

2013 2012

The whole entity's total risk policy is currently being evaluated for consideration by the Audit and Risk Committee and Board.

Liquidity risk

The entity's risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity risk through an ongoing review of future commitments and credit facilities.

At 31 March 2013 Carrying Less than 1 Over1 year amount year

Loans 76 033 257 22 512 915 53 520 342 Trade and other payables 84 585 310 84 585 310 Mafisa loans 22 243 231 12 523 032 9 720 199 Approved loans not yet paid 5 967 043 5 967 043

At 31 March 2012 Carrying Less than 1 Over1 year amount year

Loans 109 239 237 21 476 658 87 762 579 Trade and other payables 105 741 759 196155 186 Mafisa loans 20 753 921 20 753 921 Approved loans not yet paid 9 915 072 9 915 072 Approved tender contract 666451 666451



Figures in Rand

34. Risk management (continued)

Credit risk

2013 2012

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The entity only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.

Financial assets exposed to credit risk at year end were as follows:

Gross Carrying Amount Impaired

Ageing of trade receivables (Gross) Gross Impairment

Current 10 121 944 3125 516 30 days 8 947902 3 849 522 60 days 1 859 711 417 690 90 days 3180 061 1136 297 120 days 3 725528 1 597 811 150 days 3408623 1 500 214 180 days 82 493598 50457 566

113 737 367 62 084 616

Ageing of loan receivables Gross Impairment

Current 3129130 1 670 554 30 days 5 475 512 2 735115 60 days 1 518 658 698417 90 days 3 604 362 1 643 371 120 days 3 552252 1 562 762 150 days 2 884 927 1 590 446 180 days 264 670567 187 286 066

284 835408 197186 731

Debtor's turnover is within 30 days and anything beyond is considered past due.

Pat due but not Impaired

Ageing of trade receivables (gross)



Figures in Rand


Current 30 days 60 days 90 days 120 days 150 days 180 days

Ageing of loan receivables (gross)


Not past due nor impaired

Ageing of Trade receivables (gross)

Current

Ageing of loan receivables (gross)

Current

Past due but not impaired

Ageing of trade receivables (gross)


Ageing of Loan receivables (gross)

2013

8 947902 1 859 711 3180 061 3 725 528 3408623

82 493 598

103 615 423

5 475 512 1 518658 3 604 362 3 552 252 2 884 926

264 670 567

281706277

6 996428

1 459 076

7 460 109 787 027

2 080 906 2136 790 1 978 599

10 844103

25287 534

2012



Figures in Rand



Key sources of estimations - Management basis of assumption:

2013

2 358 129 593 370

1 504126 1 780 834 1156 644

55 844286

63237 389

- An assessment of the recoverability of outstanding trade receivables and loan debtors are performed on an individual debtor basis taking into account factors such as the aging and payment history.

- Based on this management estimates the potential losses in respect of amounts owed by debtors.

35. Going concern

2012

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

36. Fruitless and wasteful expenditure

Interest and penalties on VAT Rental for unused offices Interest on overdue accounts Finance Charges

37. Irregular and unauthorised expenditure

Payments made not in accordance with procurement policy

To be condoned

2 232 370 591 225

3 708 22243

2 849 546

36 833 742

1 869 941 729 972

2 599 913

6 860 000

Contravention: Goods or services of a transaction value of R2 000 to R500 000 were procured without inviting at least three written price quotations from prospective suppliers and the deviation was not approved by delegated person. "PN 8 of 2007/08 par 3.2 & 3.3 TR16A6.1

Total Value of Contravention


Contravention: Payments were made to the suppliers in excess of the approved contract or quoted amount, TR 8.2


3 604 584

9 958120

23 271 038



Figures in Rand 2013

37. Irregular and unauthorised expenditure (continued)

The Board of Directors have condoned the irregular and unauthorised expenditure subject to the following:

2012

A suppliers' database which is current and regularly updated and maintained be established from which to source all services below the formal bidding process after having sourced the required number of quotations as per the Supply Chain Management (SCM) policy. A panel of legal firms be established as part of the suppliers' database from which to source legal services on a rotational basis and/or on the basis of speciality areas of focus of the different firms. Competitive bidding processes be followed at all times when procuring services above a particular threshold as determined by the SCM policy. All contractors who are servicing MEGA be engaged on the basis of a competitive bidding process as per the SCM policy and be made to sign contracts and/or service level agreements with clear terms of payment. No service provider should be paid beyond the contracted price except for deviations that are justified in terms of the SCM policy. Appropriate actions as prescribed by the Public Finance Management Act No.1 of 1999 (PFMA), Treasury Regulations/Instructions and MEGA internal disciplinary processes be pursued against officials who were responsible for the irregular, fruitless and wasteful expenditure. Further investigations be undertaken to determine whether or not actions are warranted against officials who caused MEGA to incur fruitless, wasteful and/or irregular expenditure.

All purchases and payables will be scrutinized to ensure completeness of the Irregular Expenditure.

38. Deviations from supply chain management regulations

Goods and services amounting to R 2 372 082 were procured during the financial year under review and the process followed in procuring those goods deviated from the provisions of paragraph 12(1 )(d)(i) of Govemment Gazette No. 27636 issued on 30 May 2005, states that a supply chain management policy must provide for the procurement of goods and services by way of a competitive bidding process.

39. Prior period errors

Management has identified errors in the current period, which relate to prior period financial information. The entity has therefore undertaken to retrospectively adjust the comparative figures to take into account the corrections of the errors identified.

The nature of these errors identified is detailed as follows:

Incorrect allocation of revaluation reserve for Property, plant and equipment

other comprehensive

Income 4 911 831



Figures in Rand

39. Prior period errors (continued)

Infrastructure recorded which did not belonging to MEGA The unrecorded purchases and incorrect payment allocations against creditor accounts Investment in associates recorded at the incorrect carrying amount An understatement of Provisions estimated Overstatement of prior period financial assets relating to DBSA Loans Interest received on Mafisa funding agreement Understatement of rates payable Reversal of provision for audit fees Overstatement of trade creditors

40. Comparative figures

2013 2012

Opening retained earnings impact

(Debit)/ Credit (37 500 000) (26 358 642)

727186 (3 008 570)

(16 576 027) 846 079

(2 916 667) 2 937 430

303 687

The comparative figures presented have been restated due to errors and reclassifications of cost codes identified in the period ending 31 March 2013 to more appropriately reflect the operations of the entity, which required retrospective adjustment to the financial results as at 31 March 2012 as previously reported.

The comparative figure for Assets held for transfer has been reclassified to Investment property as the instruction to transfer it, never materialised.

The effects of the reclassification are as follows:

Statement of Financial Position

Investment property Property, plant and equipment Investment in associates Trade and other receivables Other financial assets Non-current assets held for transfer Reserves Trade and other payables Provisions Other financial liabilities - Current


Revenue Cost of Sales Other Income Operating expenses Investment Revenue Fair Value adjustments Gains and losses on property revaluation

Restated

1 539132 934 43493 266

1 853 083 51 661 479

158 971 920

26 395 542 106162 746

13 687 571 42 230 579

259 692105 (63 479 501)

3 922 209 (215 714 373)

4463 738 687 794198 20 170 889

As previously reported

1535032 934 43 493 367

1125 897 48189 532

175547 946 41 600 000 31 307 373 70 701 036 13 616 432 43 076 657

253 467162 (65 527191)

10 145 139 (213 666 619)

4 465 751 725294198 25082 720



Figures in Rand

41. Events after the reporting period

2013 2012

• Following a meeting held between MEGA and Mpumalanga Regional Training Trust (MRTI), it was confirmed that an agreement had been reached to transfer Facotry 10-2, Ekandustria to MEGA from MRTI worth R1 061 000. The properties were allocated to MRTT when MADC was dismantled and subsequent allocation of its assets to four new Mpumalanga Government entities, one of which was the Mpumalanga Economic Empowerment Corporation (MADC). The properties were not registered in Mpumalanga Regional Training Trust (MRTTs) name. As at 31 March 2013 the decision to accept the transfer had not been approved by MEGA and as such, no resolution regarding the properties had been made.

• The packing house at Tekwane Citrus Farm was damaged by fire on 28April2013. The property was worth R2 938 320. An insurance claim was instituted with MEGA's insurance, lndwe Risk Services on 3 May 2013.

• An insurance payout of R6 000 000 relating to a bumed down building that occurred in the 2008 financial year was received in April2013.

42. Govemment Grants

Total amount of government grants received:

Which comprises:

Monthly Transfers recognised in profit or loss for which the entity recognises as expenses the related costs that the grants are intended to compensate

DBSA loans installments comprising: - MADC- sugar canes and irrigation infrastructure - MEGA- Factories in Bronkhorstpruit - MHFCO- Housing loans

Set up costs for Bulk Water project management in Mpumalanga Province

Reconciliation of amounts received:

Government grants transferred to the statement of comprehensive income on a systematic and rational basis over the useful lives of the related assets

Output Vat on government grants utilised

Government grants that are currently recognised as a liability and are for the purpose of giving immediate financial support to the entity with no future related costs are recognised in profit or loss in the period in which they become receivable relating to set up costs for Bulk Water project management in Mpumalanga Province

207 040 000

147 040 000

40 000 000

20 000 000

170 031 943

18 204 472

18 803 585



Figures in Rand

43. Operating expenses

Advertising Assessment rates & municipal charges Auditors remuneration Bad debt provision Bank charges Cleaning Commission paid Computer expenses Consulting and professional fees Consumables Depreciation, amortisation and impairments Donations Employee costs Entertainment Gifts Hire Insurance Lease rentals on operating lease Legal expenses Levies Maintenance Motor vehicle expenses Other expenses Petrol and oil Placement fees Postage Printing and stationery Promotions Protective clothing Repairs and maintenance Sale of assets Security Staff welfare Storage Subscriptions Telephone and fax Training Transport and freight Travel - local Travel - overseas Utilities

2013

735 861 1 681170 4 082431

32 783 940 306 779 550944 216 263

2 157 545 8 869696

165 358 36 086893

10000 96 416 860

178 687 28863

204496 4206 333 7 870 312 1 690 688

5990 3 802524

12238 5132

540369 134 522 877697 751456 129 551 48429

638 799 660148

11 023 203 85159

364 389 421 986

2 303468 583 891 226899

2 182197 893485

5184 785

229119 436

2012

3 798 734 5417 385 6 653489

43 840 161 385 296 433 205

1053 4 341410 7 288 000

8649 1 739 560

731 770 97137 879

142 2451 8707

463 605 3 603 211 8 883 983 2 412 782

32075 4 880430

51165 1 726 711

179 036 349 941 34846

1 308 727 82974

816 223 872

9 419 300 99029 84 291 74892

1 981 634 519 095 243 826

3 215 999 364 413

3 540 177

215 714373

mpumalanga economic growth agency

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