Annual Report 2015/16 01 02 03

Published by: Eastern Cape Development Corporation Ocean Terrace Park, Moore Street, Quigney, East London PO Box 11197, Southernwood, 5231, South Africa © Eastern Cape Development Corporation, 2016

Enquiries: Corporate Communication and Marketing Eastern Cape Development Corporation Telephone: +27 43 704 5600 • Fax: +27 43 704 5700 [email protected] • www.ecdc.co.za

ISBN: 978-0-620-72428-9 Eastern Cape Development Corporation (ECDC) Annual Report 2015/16 01 02 03

ABOUT ECDC 04 CHAIRPERSON’S 06 CEO’S REPORT 14 FOREWORD 04 05 06

FINANCIAL 20 OPERATIONAL 27 HUMAN 61 REVIEW REVIEW RESOURCES REPORT 07 08 09

PERFORMANCE 67 CORPORATE 75 FINANCIAL 93 REPORT GOVERNANCE STATEMENTS

ACRONYMS 139 ECDC | ANNUAL REPORT 2015/16 4 Environment Affairs and TourismEnvironment Affairs (DEDEAT). of theMemberExecutiveCouncil(MEC)EconomicDevelopment, Development Strategy (PIDS), thepolicystatementsandbudgetspeech Growth andDevelopmentPlan(PGDP), EasternCapeProvincialIndustrial priorities oftheprovincialgovernment, asdetailedintheProvincial Corporation Act (Act2of1997)andisledbytheeconomicdevelopment The ECDCdraws itsmandatedirectlyfromtheEasternCapeDevelopment finance”. and itspeopleinthefieldsofindustry, commerce, agriculture, transport and co-ordinate, market, promoteandimplementdevelopmentoftheprovince The ECDC Act preamblestatesthatthecorporation will “plan, finance, 2.3 2.2 2.1 1.1 ensure thatthegoalsareachievedand, ultimately, themandateisfulfilled. underpinned bystrategic objectivesandkeyperformanceindicatorsto Corporation hassetitselfthefollowingstrategic goals. These goalsare In supportofitscorporate planandstrategy, theEasternCapeDevelopment MEASURABLE OBJECTIVES STRATEGICGOALS AND

RETURNS ANDA GO with governmentimper Optimise investmentinprioritysectorsoftheprovincialeconomy inline GO systems. Ensure fullimplementationof efficientorganisationalresourcesand Attain cleanaudit. Attain financialsustainability by exceedingcosts 01 AL 2: OPTIMISE ALL RESOURCES TO MAXIMISEINVESTMENT AL 1: STIMULATEECONOMIC ACTIVITY TTAINSUSTAINABILITY

atives.

ECDC ABOUT .

Eastern Capethroughfocused: socio-economic developmentinthe To promotesustainable OUR MISSION

and developmentoftheEasternCape. promoting sustainableeconomicgrowth To beaninnovativeleaderfor OUR VISION • There arealsotwotr • • • • renders avarietyofservicesrelatedtothefollowingoperational areas: To be a development finance corporation for the stimulation of economic growth in the Eastern Cape, ECDC AREAS BUSINESS CORE •

Strategic projects Properties Innovation, Development financeandbusinesssupport Economic intelligence Support services Provision ofinnovativeenterprise alliances, investmentandpartnerships Leveraging ofresources,strategic development tradeandinvestmentpromotionco-ordination anversal servicedeliverysupport pillarssupportingtheoperational areas, whichare:

financial

services OUR VALUES TEAMWORK opportunities. use ofcompanytime, assetsand truthful, accurate accountofour We arealwaysreadytogive ACCOUNTABILITY improvement. our questforcontinuous presentable demeanorand We aredefinedbyourpositive, PROFESSIONALISM honour, reliabilityandaccuracy. we areknownforourspiritof In allourdealingswithpeople, INTEGRITY our mandate. centrality ofthecustomeron We placemaximumvalueonthe CUSTOMER CENTRISM and deliveron. innovation inallwesay, think We reflectandembrace INNOVATION common goal. each othertoachievea all ofuswhenwecomplement None ofusisasproductive 5

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 6 some tryingcircumstances, whichareduetoanumberoffactors. 20-year milestonesinceitwaspromulgatedin1997, itdoessofacing As theEasternCapeDevelopmentCorporation (ECDC)approachesthe FOREWORD CHAIRPERSON’S business with. This wehavewelcomed: ithashappenedaswerolloutthe Legislature, andbytheentrepreneurialcommunity wesupportanddo Auditor-General, bythePortfolioCommitteeweaccount to intheProvincial by ourshareholderdepartment, byotherpartnersingovernment, bythe In thepastyear, ECDChasinviteditsfairshareoftheseinterrogative processes challenges. under itscontrol, andhaschallengedthemtoworksmarterinlightofresource the mandatesandefficacyofdevelopmentfacilitation supportentities becomes constrained. This iswhygovernmenthasmoved tore-interrogate of ECDC and similar economic development agenciesand financiers –also state resourcestowardsstimulatingeconomicactivity–the corebusiness Against suchcircumstances, theenvelopeforaninterventionistallocationof strained fiscus. Eastern Cape; andever-rising demandsforsocialspend againstanincreasingly rate in the country and an even higher-than-average unemployment rate in the as miningandevenagriculture, havebeenshrinking; ahighunemployment South African economywhoseproductive capabilitiesincoresectors, such since thefinancialsector-inspired tremorsof2008;a sluggishgrowthof Among thesecanbecounted: aglobaleconomythathasstruggledtorecover 02 committed leadership. ECDC underanew has seenastabilised The

past

financial

year

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 8 Chairperson oftheboard NHLANGANISO DLADLA to theboard. who continuestoprovidethevaluablestrategic counsel, supportandguidance Economic Development, Tourism andEnvironmental Affairs, SakhumziSomyo, Last butnotleast, weareindebtedtotheHonourable MECforFinance, Environmental Affairs and Tourism (DEDEAT) fortheirunfailingsupport. ECDC ship; and the leadership of the Department of Economic Development, Portfolio Committeeforitsfirm, criticalhandthathasassistedourrightingofthe astuteness atbalancingtheimperatives ofdevelopmentandsustainability; the commitment tomakingECDCawinningorganisationandsharpeningtheir leadership andexemplaryworkethic; the180-memberteamofECDCfortheir CEO oftheorganisation, NdzondeleloDlulane, forhiscalmbutdetermined organisation andensuringgoodgovernanceminimalturbulence; the to: fellowdirectorsontheboardforalltheircontributionsinsteering Finally, Iwouldliketotakethisopportunityextendawordofgratitude the future remains promising for ECDC. That said,andchallengesnotwithstanding, entrepreneurs. support operations, innovationanddevelopmentfinanceavailedtodeserving improve ourassetstocktoastatewhereityieldslevelofreturnsadequate from ourownassetsisnotgoingtobeenoughuntilwehaveresources – constrained allocationsfromtheprovincialfiscus, whilewhatisgenerated In drivingalltheseactions, wecontinuetolabourunderconstraining budgets delivering onnewopportunities. organisation topursueothernewprojects, andmobilisesupporttowards We have also seen a determinedpush on the part of the leaders of the has beentaskedwith. we haveventuredinto, suchasthesocialinfrastructure programme thatECDC have seentheorganisationperformwithaplombeveninnewareasofwork managers andothercolleaguesinthefull-timeemployoforganisation. We to deliveragainstgoalsandtargetsbyour180-strongteamofexecutives, leadership. As thisreportshows, wehavealsowitnessedrenewedvigour The past financialyearhasseen astabilisedECDC undera newcommitted we doso. the beginningof2015, anditsharpensour ongoingcriticalself-reappraisals as corporate strategy thatwerevisedattheendof2014andkickedinto playat 180 have venturedinto. areas ofworkwe aplomb eveninnew perform with the organisation We have seen ECDC TEAM MAIZE/SORGUM RED HUB MEGA-FARM CREATED ATNCORHA THE AND MQANDULISITES 115 jobs 3 700ha 9

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 10 Committee and Nomination Chairperson -Governance Chairperson oftheboard DLADLA NHLANGANISO Investment Committee Chairperson -Fundingand the board Deputy Chairpersonof JIYA LOYISO OF DIRECTORS BOARD Committee Risk andCompliance - Audit,Chairperson BOSMAN PAMELA Officer Chief Executive DLULANE NDZONDELELO NQADOLO BULELWA Officer Chief Financial SENTWA SANDILE Committee Social andEthics Chairperson - MAQETUKA MZUVIKILE THOBELA SIMPHIWE SISHUBA MATHOBELA Remuneration Human Resources and Chairperson - SIWAHLA-MADIBA NANDI DAMANE MALUSI 11

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 12 Directorships: NelsonMandelaInstituteforEducationandRural Development Training, Coordinator: IlimaCommunity Economics Current position:Senior Associate: NMMUCentreforIntegrated PostSchoolEducationand University); andMastersdegreeinEducation(Ed.M)(HarvardUniversity) Qualifications: B.Com (UniversityBotswanaandUniversityofSwaziland); MBA(Bentley Committees: NHLANGANISO DLADLA:Chairpersonoftheboard SANDILE SENTWA ChiefFinancial Officer Cape TreasuryEastern Current position:DeputyDirectorGeneral: MunicipalFinancialGovernance, Public PolicyandManagement(UniversityofLondon) Professional Certificate, PublicFinancialManagement(UniversityofLondon); MSc, Qualifications: B.Acc, Financial Accounting (UniversityofSouth Africa); Individual Committee Committees: Audit, RiskandComplianceCommittee, FundingandInvestment BULELWA NQADOLO Hare); andMasterofBusinessLeadership(UniversitySouth Africa) Qualifications: B.Agric (UniversityofFort Hare); B.Agric Honours(UniversityofFort NDZONDELELO DLULANE: ChiefExecutiveOfficer Commission ofSouth Africa (NECSA) Directorships: Kwazulu-NatalSharksBoard, LuwaGroupandNuclearEnergy Current position:Chairperson: LumokaChartered Accountants (University ofSouth Africa) Accounting Science(UniversityofSouth Africa); andPostgraduate Diplomain Auditing Qualifications: CA(SA), B.Com, Accounting (UniversityofNatal); HonoursBachelorof Investment Committee; andGovernanceNominationsCommittee Committees: Audit, RiskandComplianceCommittee(Chairperson); Fundingand PAMELA BOSMAN Directorships: Bannow Africa, RTIHoldingsandEnergy Africa Current position:ExecutiveChairman: Jiya Associates Hons (Economics)(UCT); andBA(EconomicsIndustrialSociology)(Rhodes) Qualifications: MBAFinance(cumlaude)(UniversityofMassachusetts, Amherst); BA Nomination Committee Committees: FundingandInvestmentCommittee(Chairperson); andGovernance LOYISO JIYA: DeputyChairpersonoftheboard Honours (UNISA); HigherDiplomain Auditing; andSAICAITC(QE1) Qualifications: B.Comp (Universityof Transkei); Certificatein Theoryof Accounting; Governance andNominationCommittee(Chairperson)

Appointed 01/10/2014 Appointed 01/10/2014 Appointed 19/10/2011 Appointed 08/2012 Appointed 03/11/2009 Appointed 01/01/2015 SIMPHIWE THOBELA and FutureForesight Group Directorships: Management (UniversityofStellenboschBusinessSchool) Qualifications: Remuneration Committee Committees: SocialandEthicsCommittee(Chairperson); andHumanResources MZUVIKILE MAQETUKA Committees: NANDI SIWAHLA-MADIBA Directorships: Mayibuye Transport andZulukamaDevelopment Trust Transkei andBhishoaffiliatedwiththeGeneral CounciloftheBarSouth Africa Current position: Advocate ofHighCourt, MemberoftheSociety Advocates of Qualifications: B.Juris (Universityof Transkei); andLLB(Universityof Transkei) Remuneration Committee; andGovernanceNominationsCommittee Committees: Audit, RiskandComplianceCommittee, HumanResourcesand MATHOBELA SISHUBA ILIMA TrustDirectorships: Current position:Director: NLKNHolding and RegionalPlanning(UniversityofKwaZulu-Natal) Public Management(RegenesysSchoolof Administration); andMastersIn Town Qualifications: B.Com, Logistics(UniversityofSouth Africa); PostGraduate Diplomain Committees: FundingandInvestmentCommittee; andSocialEthicsCommittee Current position:Director: Mirrione Master of Arts, Anthropology (BostonUniversity) Qualifications: BA(UniversityofFort Hare); BA, Honours(Universityof Fort Hare); and Remuneration Committee Committees: MALUSI DAMANE Tshwane North TVET &MpumalangaDepartmentof Agriculture of SocialDevelopment; aswellriskcommitteemember-DepartmentofEnergy, Social Development, EasternCapeProvincial Treasury &EasternCapeDepartment Health andSafetyCouncil, NationalHeritageCouncil, MpumalangaDepartmentof Directorships: Audit committeemember-GautengProvincialLegislatureBoard, Mine Agency (ASCA); Consulting Advisor: Governance&FinancialManagement Current position:ExecutiveChairmanandSoleDirector: About SurvivalConsulting Qualifications: B.Comp, Honours; PostGraduate Diploma, FinancialManagement Audit, RiskandComplianceCommittee, SocialandEthicsCommittee FundingandInvestmentCommittee; andHumanResources Human ResourcesandRemuneration Committee (Chairperson) SacOil Limited, KarooMiningDevelopment, ErnestMaqetukaFamily Trust BA, Honours(Universityof Westminister, UK); andCertificateinStrategic

Appointed 01/10/2014 Appointed 15/09/2014 Appointed 08/11/2012 Appointed 15/09/2014 Appointed 15/09/2014 13

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 14 performance andlowgrowthforecasts. of stimulatingtheeconomyagainstbackdroplacklustreeconomic (ECDC) havecarriedouttheirmuch-neededbutchallenging mandates Development financiersliketheEasternCapeCorporation tumultuous thattheprovinceandSouth Africa hasfacedinsometime. There is no doubt that the past financial year has been one of the most • the provincefocusingonfourkeyareas: ECDC’s strategy isnowconfiguredsothatitcanprovidemaximumimpact to in order to be better able to deliver on its mandate of economic development. into anorganisationthatisclearaboutitsgoalandtheroadmapitneedstotake Yet ECDCisresilient. A timeousstrategic overhaulin2014helpedshapeshiftit benefit oftheprovince. negatively impactedonfurthereconomicdevelopmentprogrammes forthe the taskoffocusingongettingcorporation outofthisquandaryasit financial year, apositionthatECDCwasnotaccustomedto. We setourselves The corporation wasalsohithard byaqualifiedauditopinioninthe2014/15 • from thisportfolioforreinvestment intootherstrategic economic propellers. ECDC’s refocused propertiesisdrivenbyastrategy tomaximisereturns • • • environment intothreemainstreams: The adoptionoftherevisedstrategy hasledtotherepositioningofproperty development andsupport. and growththroughprovidingsmall, medium andmicroenterprise(SMME) This isallgearedtowardsfacilitatinginclusivesocio-economic development • •

Innovation, Development financeandbusinesssupport contracts/lease managementoftheretainedstock non-performing element(residential)ofthisportfoliowhileenhancing the on ECDC’s vacantland, commercialandindustrialproperties as security, propertyrates andtaxes, andmaintenance. Properties F Property management, Property investment, Str acilities management, whichseekstomanagethemajorcostdrivers, such ategic projects 03 trade andinvestmentpromotion co-ordination which mainly focuses on development and investment whichmainlyfocusesondevelopmentandinvestment which focuses on the disposal of the non-core and whichfocusesonthedisposalofnon-coreand REPORT CEO’S

finance ECDC’ 1 875jobs. resulting inthecreation of which wentto260SMMEs, a totalofR92.3million, year challenges ofthe Despite the

s development function

under

disbursed

review,

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 16 Eastern CapeSOCLtd, andtheBuffaloCityMetropolitanMunicipality, ECDC Together withitssubsidiary, the Automotive IndustryDevelopment Centre (ICT) andautomotive sectors. information andcommunications technology benefited 39incubatedenterprisesin the 940 SMMEs.ECDC’s incubationprogramme support instrumentsbenefitingmore than related skillsthrough itsnon-financial on sector developmentandother business- In theyear under review, ECDCembarked balancing sustainabilityandadevelopmentmandate. which translates toconcomitanthigh transaction costs, reflectingthecostof Mitigating thehighimpairmentrate calls for closemonitoringoftheseSMMEs, hence therelativelyhighimpairmentrate. and establishedcounterparts, struggletohonourtheirfinancialcommitments; that, intoughtimes, thesebusinesses, unliketheirmoreexperienced, skilled have collateral andtowhomECDC lendssolelyagainstcashflows. Itmeans lends primarilytoenterprisesatthelowerendofmarket, whichdonot These results should also be contextualised with the understanding that ECDC their duediligenceandongoingmonitoringoftheloanbookperformance. finance teamwhenmakingtheirupfrontfinancialassessmentsandconducting These resultsaredueinnosmallparttotheastutenessofourdevelopment 5% onthepreviousyear, whichisnoteworthy. Despite currentconditions, SMMEsimprovedtheirloanrepaymentsto73%, up a moresustainableloanbookbyraising morelong-termloansforannuity. is goodforliquiditymanagement, ECDC’s focusinthelongtermisonbuilding term loansand27.3%short-termloans. While repaymenton short-term loans The loanbookcurrentlyreflectsahealthyportfoliostructureof72.7%long- was followedbytheservicesector, which receivedR32.7million(38%). all, 31loansvaluedatR41.8million(49%) weredisbursedtothissector. This in particular, theconstructionsector–receivedlion’s shareoffinancing. In The loanbookcontinuestoreflecttheneedforshort-termfunding. Nexus –and this istheonlysourceoffinancingloanbook. R136.3 million. Itshouldbenotedthatloan repaymentsplayacrucialroleas The loan revenue collections in the year under review amounted to in thecreationof1875jobs. function disbursedatotalofR92.3million, whichwentto260SMMEs, resulting Despite thechallengesofyearunderreview, ECDC’s developmentfinance up onlastyearwhenECDCcollectedR61million. as improvedleaseagreementarrangements wereputinplace. This revenueis levels increased, asevictions(wherenecessary) werespeedilyattendedto, and In theyearunderreview, propertyincomerosetoR69.5millionasoccupancy asset baseinthecomingyears. business unitwithforecaststoreturnyieldsof10%12%onitsR1.1billion The property portfolio with its focused structure has transformed into an agile the valueandreturnsofthisportfolio. the comingfinancialyears, withpartnersbroughtonboardtohelpinimproving Implementation ofthisstrategy startedinthereviewyear; itwillyieldresultsin

1 875jobscreated R69.5m R92.3m LOAN REPAYMENTS PROPERTY INCOME DISBURSED TO 260SMMEs 5 % Chief Executive Officer NDZONDELELO DLULANE to work, play andinvest. enthusiasm anddiligence, strivingalwaystomaketheEasternCapeplace diligence incarryingoutECDC’s mandatewithrelentlesscommitment, To ECDC’s executive team and employees, thank you for your support and out ECDC’s revisedstrategy. I lookforwardtofurthersuccessesinthecomingyearaswe continuetoroll province. This past year has been noteworthy, as our resultshave shown, and ECDC mandate and making a real difference to the lives of the people of our It isheart-warmingtoseeyourveryrealcommitmentdelivering onthe of ChairpersonNhlanganisoforitssupport, wiseguidanceandstrategic insight. In conclusion, • • • • • will focusonthefollowingpriorityareas: In the 2016/17 financial year, the corporation and efficiencyofourprocurementprocesses. resources inprocurement, whichhavehadamarkedeffectoneffectiveness in theMakanaLocalMunicipality. This unithasbenefitedfromadditional also contributedtowardsstabilisingtheR90millionwaterreticulationsystem The corporation’s integrated socialinfrastructure developmentprogramme has R1.8 billionininvestmentswindenergy, creatingmorethan960jobs. local andforeigndirectinvestment, have alsomadesubstantialimpact, with Our investmentpromotionactivities, whichareaimedatattracting both partners tosupportthisinitiative, whichresultedin614jobsrealised. industrial mining. ECDCleveraged morethanR19.8millionfromstrategic processing, marineandaquaculture, renewableenergy, manufacturingand are aspiringyoungblackindustrialistsinkeystrategic sectors, suchasagro- and supportbuddingentrepreneurs. The majorityoftheseentrepreneurs impact, ECDC, throughitsinnovationinitiative, continuestoidentify, develop In contributingtothegrowthofprovincialeconomywithmeaningful 83 jobs. generated atotalofR11.8millioninturnoverandcreatedand/ormaintained These smallenterprisesbasedinthetwoincubatorssupportedbyECDChave Information Technology Initiative, benefitting34incubatedenterprises. ECDC also continued to support the ICT and film incubator, the Eastern Cape Mdantsane townshipeconomy. (including originalequipmentmanufacturers)aspartofdevelopingthe nurture youngentrepreneurswhowillfeedintotheautomotivesector established anautoincubationcentreinFort Jackson tohelpdevelopand

returns fromretainedstock costly propertiestounleashrevenueforinvestmentwhilemaximisingthe Southern Africa, andtheDepartmentof Trade andIndustry(dti) Health, DepartmentofRoadsandPublic Works, theDevelopmentBankof key stakeholders, suchastheDepartmentofEducation, Departmentof integrated socialinfrastructure developmentprojectsinpartnershipwith Continuing tostriveforacleanaudit. Further increaseintensityofthedisposalnon-coreandnon-performing energy, aqua-cultureandtheoceaneconomy sectors likeagro-processing, construction, manufacturing, renewable Through developmentfinanceandbusinesssupport, Through in EastLondonandDimbazajustoutsideKing William’s Town Revitalisation ofindustrialparks strategic projects, with its full potential and capacity, deliver mygratitude goestotheBoardofDirectorsunderleadership , Vulindlela HeightsinMthatha, Fort Jackson focus more on key focusmoreonkey

R1.8bn over 960jobscreated Municipality Makana Local system water reticulation the R90million towards stabilising contributed unit hasalso development infrastructure integrated The corporation’s INVESTMENT WIND ENERGY

the .

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 18 From lefttoright: Executive Manager: Integr BABINI MELITAFA Acting ExecutiveManager:De D Executive Manager:Officeofthe CEO NOSIPHO NGEWU Chief ExecutiveOfficer NDZONDELELO DLULANE Chief F SANDILE SENTW Chief Economist MXOLISI LINDIE AVID MANDELL inancial Officer A

MANAGEMENT EXECUTIVE

ated SocialInfrastructure Development Programme

velopment Finance andBusinessSupport 19

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 20 other organsofstate. of infrastructure projects managed by the corporation and on behalf of unit. Itincreaseditscapacityinordertosupporttheimplementation The 2015/16financialyearwasaneventfulforECDC’s finance development mandateisachieved. ensuring thatthedelicatebalancebetweenfinancialsustainabilityand Furthermore, on theofficeofchieffinancialofficercontinuestofocus the corebusinesswithaimofdrivinggoalsorganisation. various operational andsupportfunctions ofthecorporation inthedeliveryof The unitcontinuestoprovideinnovativefinancialandsupportservices public assets. is alsocompliantwithregulations andlegalprescriptsgoverningtheuseof an unqualifiedauditreport was achievedfortheyearunderreview. ECDC that issues relating to the prior year’s qualified opinion were resolved and The unitalsoplacedgreatemphasis onimprovinggovernancetoensure a responsiveandcustomer-centric developmentfinancier. has beenachieved, indicatingECDC’s effortstowardassumingthepositionof disbursements tocustomers72hours. Iampleasedtoreportthatthistarget There wasalsoasignificantfocusonimprovingtheturnaround timeforloan improves theauditoutcomeandcompliancewithlegalrequirements. sustainability. The ERPsystemimprovesefficiencieswhilesoundgovernance In essence, theimprovement ofthecosttoincomeratio shouldensurefinancial operating costtoincomeratio tobreakeven. The objectiveofthissystemistoimproveefficienciesinasfar asreducingthe a solutionhasbeenacquiredandwearenowattheimplementationstage. efficiencies. Iampleasedtoreportthatabusinesscasehasbeenfinalised, enterprise resourceplan(ERP)forintegrated reportinginordertoimprove processes andsystems. The objectivewastodevelopabusinesscaseforan The finance unit’s goal fortheperiod under review was to improveorganisational CORPORATE SUSTAINABILITY 04

REVIEW FINANCIAL

or was toimprove period underreview processes ganisational goal forthe finance The corporate

and

systems. unit’s

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 22 previous year. value of ECDC’s investment propertiesto R172 millionfrom R150 millionin the the reviewperiod. This increaseinprofitwasdrivenprimarily bygrowthinthe The corporation’s bottom-lineincreasedfrom R72milliontoR99during FINANCIAL PERFORMANCE of which97%thebalancewasimpaired. 31, 2016, theunpaid rentalbookstoodatR245millionfortheentireportfolio book, drivenbythenon-paymentofrentalsresidentialtenants. As ofMarch The liquiditypositionwasaffectedbythecontinuousincrease inthedebtors’ As ofMarch31, 2016, thetotalcashflowpositionofECDCwasR247million. to dealwiththecostsofpackagingloans. Ongoing discussionswiththeshareholderforadequatecapitalisation ofECDC packaging loansremainshigh, furthercompromisingECDC’s cashposition. its own fundsfordisbursal to SMMEsthroughloan repayments. The cost of without shareholderfundingorcapitalisation. ECDC, therefore, generates Currently, thecostofpackagingdevelopmentloansisincurredbyECDC mandate. in ordertoimprovethecorporation’s cashavailabilityforitsdevelopment to disposeofacertainportfoliowithinthecorporation’s investmentproperties earning bookandloans. This necessitatedthatECDC’s boardtakeadecision balance sheet. Generally, DFIsneedtohaveacombinationofaninvestment Loans andinvestmentsshouldideallymakeupabiggerproportionofthe Balance sheetitemsforthepast5years(Rmillions) repaid infull April 2016. We areproudtoreportthattheDevelopmentBankofSouthern Africa loanwas an investmentpropertyvalueofR1billioncomparedtoR83millionforloans. taking intoaccountECDC’s DFIrole. For example, thebalancesheetreflects that theloanbookcomparedtoinvestmentpropertiesisdisproportionate, Currently, ECDC’s balance sheet does not reflect its developmental goals in positive bookvaluewasmainlyanincreaseintheofinvestmentproperties. total groupliabilitiesbyR1.2billion(Company: R1.1billion). The driverforthis ECDC’s balancesheet remains strongwith its totalgroup assets exceeding BALANCE SHEET 0621 0421 2012 2013 2014 2015 2016 1 041 24 48 32 83 34 247 102 879 25 45 32 20 279 139 744 25 43 32 20 470 135 675 26 44 33 16 229 128 605 27 90 56 46 359 R247m TOTAL CASHFLOW Cash andcashequivalents Trade andotherreceivables Loans advances Investments subsidiaries andassociates Investments andloansin Property, plantandequipment Investment property 2012 2013 2014 2015 2016 Percentage turnoveronaverage investmentproperty ratio.declining the efficiencyofinvestmentpropertyportfolioinordertoreverse rental renewalsandescalations. ECDCisfacedwithachallengeofimproving ECDC’s investmentpropertiescoupledwiththesluggishgrowthinlease in 2015 to 7.8% in 2016. This was mainly due to the growth in the value of The turnoveronaverage oninvestment propertiesdeclinedfrom8.9% year. million in2016, reflectinganincreaseofR2millionfromthepreviousfinancial R22 million in the review period. Other income provided a healthy return of R28 Interest onrentaldebtorsalsogrewbyR2millionfromR20in2015to financial year. the R30millionbudgetcutimposedontransfers toECDCinthe2015/16 to thelowergovernmentgrants receivedinthecurrentyearasaresultof the 10%decreaseingovernmentgrants. This declinewasmainlyattributable period underreview. The mostnoticeablevarianceinthesourcesofincomeis R9.5 million(3%)fromR313inthepreviousyeartoR303 Total incomeexcludingfairvaluegainsandinvestmentrevenuedeclinedby Sources ofincome(Randmillions) INCOME 0621 0421 2012 2013 2014 2015 2016 0% 171,77 10,90 28,58 154,17 22,49 22,99 75,18 9.3% 9.5% 9.5% 8.9% 7.8% 149,57 10,95 26,67 171,76 20,48 22,46 71,56 5% 75,07 7,17 202,72 15,31 22,19 65,76 9,50 10% 65,38 13,14 146,99 14,62 21,16 59,98 8,70 17,91 44,84 8,94 92,16 15,42 24,51 54,85 15%

R303m TOTAL INCOME Revaluation Investment income: bankandother Other income Government grants Interest onrentals Interest onloans Rental income 20% 25% 23

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 24 Chief Financial Officer SANDILE SENTWA into liquidation, followingtheapprovalofMEC. dispose of ECDC’s shareholding to interested parties. The company was placed to placetheOceanwise(Pty)Ltdsubsidiaryintoliquidationoralternatively Department of Economic Development, Environmental Affairs and Tourism ECDC hasalsoreceivedthesection54(2)approvalfromMECof year andisreportedasadiscontinuedoperation. Corporation, thecompanyhasnotbeenconsolidatedincurrentfinancial unavailability offundingfromECDC and theIndustrialDevelopment Due tothenatureofgoingconcernissuesinOceanwiseand ECDC beforederegistration islodged. and Windsor Hotel SOC Ltd are in the process of transferring their properties to of ECDC(Tourism Infrastructure DevelopmentCorporation). Transido SOCLtd Ltd, Windsor HotelSOCLtdandasection21companywhichisnotsubsidiary The threesubsidiarieswhichhavenotyetbeenderegisteredare Transido SOC not beenderegisteredatthetimeofthisreview. Marketing Authority (Pty)Ltd. OnlytheEasternCapeMarketing Authority has 93 (Pty)Ltd, UmtataSmallIndustriesComplex (Pty)LtdandEasternCape been lodgedforderegistration. These includeIkhala Aloe (Pty)Ltd, Worthytrade subsidiaries earmarkedforderegistration inthepreviousfinancialyearhave position withtheexceptionofOceanwise(Pty)Ltd. A totaloffouroutseven All ECDCsubsidiariesandassociates’balancesheetsreflectagoingconcern SUBSIDIARIES ANDASSOCIATES reduce andrecoverpropertyoperating costsfromtenants. the costs. A facilitiesmanagementinitiativeisbeingimplementedtomanage, well asbuildingandsecurityservicesatR14million, makingupthemajorityof high with rates and taxes of R19 million, water and electricityat R17 millionas The total operating expenditureincurredbyinvestmentpropertiesremains and Tourism.Affairs surrendered totheDepartmentofEconomicDevelopment, Environmental financial year, thecurrentyearincludes non-recurringexpenditureofR23million Although operational expenditure isdown by 5% compared tothe previous EXPENDITURE OPERATING EXPENDITURE 5 % PROPERTIES = AND RESIDENTIAL R1.1bn COMMERCIAL PROPERTY UNIT FACILITIES MANAGEMENT PROPERTY MANAGEMENT PROPERTY INVESTMENT REPOSITIONED 25

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 26 05 REVIEW OPERATIONAL 27

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 28 DEVELOPMENT WOMEN-OWNED FINANCING TO BUSINESSES 59 1jobs 242 CO-OPERATIVES FUND&JOBSTIMULUS R92.3m 2015/16 260 SMME 700 jobs % CREATED THROUGH LOAN FINANCING CREATEDIMVABA THROUGH DISBURSED TO HIGHLIGHTS YOUTH-OWNED FINANCING TO BUSINESSES 119 FINANCE % s remain stable repayments community pillar ofthe seen asa Overall loan ECDC is DEVELOPMENT FINANCE the previousreviewperiod. growing byR6million(16%)and representing49%oftheloansdisbursedin Invoice-based loans enjoyed the largest share of the loans at R44.8 million, finance enabledtheseyouth-owned SMMEstocreate826jobs. increase onthepreviousyear’s performance. Additionally, havingaccessto youth-owned businessesreceivedR34.7million, whichrepresenteda119% Similarly, financingtoyouth-owned businessalsogrewsignificantly: 106 total of676jobs. total. a The totalof115 women-ownedSMMEsfinancedin2015/16created review year. Disbursementagainst theseloansconstituted28%oftheyear’s Financing towomen-ownedenterprisesamountedR26.3 millioninthe 1 242jobsbeingcreated, retainedorsavedduringthisperiod. disbursed to260enterprises. Access todevelopmentfinancehas resultedin corporation maintainitsdisbursementlevelsof2014/15withR92.3million The netresultofthisfinancearmouryduringthepastyear hashelpedthe other strategies topositionthebusinessforsustainability. programmes, whichcanincluderestructuringthecurrentdebt, aswell payments ordefaultsonrepayments, ECDCbringstheseclientsintomentoring However, when businesses encounter challenges that result in sporadic difficult economicconditions. with sufficientbusinessprowesstoensuresustainability, particularlyduring This financeispartneredwithotherresourcesinordertobuildbusinesses value ofR20million. These productsincludetraditional and equityfinancing. term financeproductsareforaperiodofupto60monthsandmaximum are contractor loans, invoice-basedloansandtraditional smallloans. Itslong- ECDC’s short-termloanshaveaduration ofnolongerthansixmonths. These SHORT-TERM AND LONG-TERMLOANS credit functions. establishing acreditriskinvestmentcommittee, separating thesalesand imperatives, theunithasalsoreconstituteditscreditvettingprocessby In ordertofurtherstimulatelendingthatisalignedwiththedevelopment growth anddevelopmentintheprovince. by therealisationthatsmallbusinessholdskeytoenhancedeconomic of theseimperatives toachievemaximum developmentimpact, underpinned Hence, ECDC’s financeproductsareprogressivelydesignedwithcognisance economic transformation forthoseitfunds. and ensuring acceptable levels of return on investment while still achieving with contracted governmentfundingandincreaseddemandforfinance, traditional collateral in place, managing the associated higher risks, dealing balance theimperatives offinancingbusinessesthatdonothavethe Yet thechallenge for developmentfinanciers, suchas ECDC, is toadeptly of SMMEs, hasbecomeessentialforcontinuedeconomictransformation. continue forsometime. Italsocomeswhendevelopmentfinance, thelifeblood has tightenedduetothedifficulteconomicconditionsthatareexpected Customers’ voteofconfidencecomesatatimewhenaccesstofinance customers recommendittofellowentrepreneurs. is apillarwithinthecommunity. Itistrustedandwell-respected, anditsloyal Results ofa2015customersatisfactionsurveyshowedthatthecorporation business enterprisesthroughouttheprovince. itself asthedevelopmentfinancierofchoiceformanysmalltomedium The Eastern Cape Development Corporation (ECDC)has firmly established community pillar withinthe corporation isa showed thatthe satisfaction 2015 customer Results ofa JOBS CREATED 676 826 ENTERPRISES BY YOUTH-OWNED ENTERPRISES BY WOMEN-OWNED .

survey

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 30 default andmadeup20%ofall defaultingclients. based loans. Payments fromsmalltraditional loan clientsweresporadic orin difficulties, aswellimprovingcessionmanagement inrespectofinvoice- tighter managementapproach tomentoringclientswhosebusinessesface loan portion, wouldimproveto46%. This isaresultofmorerobustand significantly andtheimpairment rate oftheloanbook, withoutthehistorical It wasalsonotedthatsince2012, thenumberofimpairedloanshasdropped to makearecovery. However, inallcasesofdefaulting clients, ECDCexhaustsalllegalchannels who defaultofthesedealsareunlikelytoserviceloans onceindefault. On theotherhand, duetothetransient natureofshort-termloans, clients Product per financeproduct Approvals, disbursementsandnumberofSMMEs loans haveunderlyingsecurityandcanberecovered. that arelentonthiscategory. Generally, however, alargeportionofthese R108 million; 60%ofthisislongtermduetothenaturehighervalues (arrears) loansforthepastsevenyears. The valueofthispartthebookissetat During thepastyear, ECDCundertookanin-depthanalysisofitsoutstanding profitability ofthefinanceportfolio, stimulatingorganicgrowthinliquidity. the relaxingofdemandforshort-termloans. This shouldleadtoimproved term loans. However, this is dependent on improved economic conditions and In thelongterm, ECDCplanstobuildaloan bookthatisbiasedtowardslong- despite theeconomicconditionsthatweakenedsignificantly. 68%, only fourpercentage points up on last year’s impairment rate of 64%, finance portfolioistheconservativeincreaseinimpairments, whichroseto Testament tothedevelopmentfinanceteam’s robustmanagementofthe repayment record, whichroseto73%, upfrom68%inthepreviousyear. Notwithstanding theprevailingconditions, ECDCclientshaveimprovedtheir totalled R69.9million, 76%ofloansdisbursed inthereviewperiod. towards totheeasternpartofEasternCape. Disbursementsforthisarea ECDC’s disbursementsalsoreflecta geographic andmuch-neededbias this loancategory. improvement ofR1.2million(14%)fromthepreviousyear’s performancefor Term-defined debtfinancingaccountedforR9.9million(11%)oftheloans, an represented asignificantdropof60%. Disbursements forthiscategorytotalledR6.6millionin2015/16, which Small businessorstart-uploansstoodatR2.6million(3%)in2015/16. invoice-based loans, thesemadeup87%ofthe2015/16loans. This class of loan represented 38% of total loan disbursement. Together with On the other hand, contractor loans fell by R7.3 million (17%) to R34.9 million. Cnrco 735243 4 5 8 9 228 16 38% 49% defined debtfinancing 3% TermCap: Term- LONG-TERM 34947052 27305 274 44801037 Workflow: Contractor 2645789 46954235 Nexus 3089228 : Invoice-based Powerplus: Start-up SHORT-TERM 7 6 1 9 1 7 11% 9919099 9372262 6709892 312978 86 720998 prvl ibreet ibreet Numberof Disbursements Disbursements Approvals R R % % SMMEs 260

7 SMME long-TERM LOANS TO 253 SMME SHORT-TERM LOANS TO APPROVED LOANS s s R1 297731 Joe Gqabi R2 793816 Chris Hani R3 283761 Sarah Baartman R6 639652 Amathole R10 165783 Alfred Nzo R17 110162 Nelson MandelaBay R24 537620 Buffalo CityMunicipality R25 484454 OR Tambo Geographic spread ofloans Disbursements ofloanspersector applications inthereviewperiod. operatives, havebeen instrumental insolicitingaqualitypipelineof Strategic partnerships, aimed atimprovingcoordinatedsupporttoco- for the127membersof17 co-operatives. of R8millionwasapprovedand itenabledthecreationofdirectemployment Co-operatives Fund, abovethetargeted16co-operatives in2015/16. A total In thereviewperiod, 17co-operatives wereapprovedfortheImvaba IMVABA CO-OPERATIVES FUND support thesecompanies. Environmental Affairs and Tourism (DEDEAT), is revising current policies to In thecomingyear, ECDC, withtheDepartmentofEconomicDevelopment, the numberofjobssavedinpreviousyear. of R4.25million. This meantthat583jobsweresaved, anincreaseof37%on 10 clients. This is close to a 17% increase on the previous year’s disbursements be anatural consequence. The JobsFunddisbursedmorethanR5millionto support waslargelyfromcompaniesindistressandwherejoblosseswould During the2015/15financialyear, demandforEasternCapeJobsStimulusFund EASTERN CAPEJOBSFUND 45+36+632+1 R41 835799 Construction 31 SMMEs 45% R32 733967 198 SMMEs 36% Services

Manufacturing R5 913225 9 SMMEs %6 %2 1% 2% 3% 6% 6% SARAH BAARTMAN 7 smme 4% R5 827949 s 10 SMMEs ICT CHRIS HANI NELSON MANDELABAY 24 smme 3% Agro-processing R2 956410 37 smme 18% 1 SMME s

s JOE GQABI 127 5 smme 10 clients. than R5millionto disbursed more The JobsFund 1%

Hospitality/Tourism JOBS CREATED R1 803350 s 4 SMMEs BUFFALO CITY 105 smme 27% AMATHOLE 35 smme ALFRED NZO 7%

6 smme s R1 242278 11% 7 SMMEs OR TAMBO 41 smme Retail s 28% s s 31

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 32 BUILDING CONSTRUCTION VALUE OFPROJECTS R83.8m LOANS APPROVED 141 R2.8m FEZ JOBS CREATED

R4.9 million. Bizana, whichcreated21jobs. ECDCfinancingfortheproject amountedto Zingwazi Contractors builtaR22.7millionmulti-purposecommunityhallin were createdandR1.7millioninwagespaid. renovation ofthemagistrate’s officeinKwaBhaca(Mount Frere). Fiftyjobs R20.9 million(ECDCfinancingfortheprojectcametoR3.1 million); and Maxwele Municipalclinicwithadjoiningstaffaccommodation, valuedat MC BavuJV TP Constructionwasinvolvedin twonotableprojects: theMthatha 45.7%, risingto55.7%amongtheyouth. significant impactasunemployment rates intheseareas range from38.3%to 141 jobswiththewagebilltotallingR2.7million. These projectscreate R83.8 million; loansforR20.8millionwereapproved. These projectscreated Maloti CollegeintheMatatielemunicipalarea. The valueofprojectstotalled three schools, inButterworth, EngcoboandIdutywa, aswellupgraded the Fez BuildingConstruction, along-standingclientofthecorporation, built eastern partoftheEasternCape. provide socio-economicupliftmentinthe important infrastructure projects thatwill construction companiesare involvedin Equally pleasingwasthattheseestablished 14 loanstonineSMMEsinthissector. those thatarestrongonjobcreation, ECDCdisbursedR34.9millionin South Africa. Inlinewith thesupportingsectorsofprovince, particularly sectors, aswasthecaseinlastquarterof2015, accordingtoStatistics Construction hasconsistentlybeenoneoftheEasternCape’s bestperforming IMPACT funding ofR1.6millioninthereviewperiod. Co-operatives Fund, ofwhichfourco-operatives wereapprovedwithtotal Consequently, theforumidentifiedeightpotentialapplicantsforImvaba District Municipality’s localeconomicdevelopment unit. DEDEAT’s regionaloffice, JoeGqabiDevelopment AgencyandJoeGqabi of theregionandleveraging ofpartnerresources. Othermembersinclude forum aimedatestablishingcollaboration fortheeconomicdevelopment In theJoeGqabidistrict, ECDCformspart ofalocaleconomicdevelopment applications fortotalfundingofR1millioninthereviewperiod. six potentialapplicants. This resultedintheapprovaloftwoco-operative development unitandDEDEAT’s Alfred Nzoregionalofficehelpedidentify In the Alfred Nzodistrict, UmzimvubuLocalMunicipality’s localeconomic Mthatha. partnership theImvabateamhasforgedwithKei Fresh ProduceMarketin Tambo districtreceivedR3.3millionin2015/16. This canbeattributedtothe For example, a total of seven potato growing co-operatives within the OR

1 976 Development Centre Automotive Industry Co-operatives Fund Imvaba Stimulus Fund Eastern CapeJobs Loans JOBS CREATED 1 242 120 583 31 33

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 34 39 smme automotive /filmandictincubators: BUSINESS s 112 2015/16 ENTERPRISES SUPPORTED YOUTH-OWNED 93 (32%) WOMEN-OWNED 146 (50%) 83 jobs 292 HIGHLIGHTS PROGRAMME CREATIVE INDUSTRIES SUPPORTED THROUGH ENTERPRISES SUPPORT R11.8m TURNOVER BUSINESS SUPPORT (NMBBC’s) EnterpriseDevelopmentProgramme. included participants in the Nelson Mandela Bay Business Chamber’s A totalof19smallbusinessowners andmanagersreceivedtraining. These start-ups. strategies, websitesandbranding, and26%consistedofbusinessplansfor A further27%wasmadeupofmarketingsupport, whichincludedmarketing accounted for38%ofECDC’s businesssupportinterventionsinthepast year. Market accessopportunitiesthroughthecreativeindustries programme support servicesin2015/16, 4%morethanthetargetof280. Consequently, atotalof292 enterprises receivednon-financialbusiness earnings toitsmembers. increasing profits, increasing savings, creatingemploymentandproviding of theirbusinesses, reachingpotentialmarketsoutsidetheEasternCape, interventions thatECDCbelievesentrepreneurscanstarttogrowthescale year underreview. However, itisthroughinvestmentinmorelong-term remained animportantpartofECDC’s non-financialsupportservicesinthe The empowermentofsmallbusinessesthroughtraining andseminars the ECDC-fundedEasternCapeHandmadeCollectionlocallyandabroad. ecosystem; packagingsupportprogrammes foryouthandwomen; andpromoting business incubators in key sectors as these offer a sustainable entrepreneurial as theseprovideacommittedandcaptivepoolofentrepreneurs; supporting In thisregard, ECDCisalso: solidifyingpartnershipswithbusinessassociations repayments. run sustainable enterprises that generate sufficient revenue to honour loan intended toprovideloanclientswiththeongoingsupportthattheyneed enterprise developmentfinanceandsupportteams. Thisreconfiguration is Hence, thecorporation hasfocusedonimprovingalignmentbetweenits significant factorsthatcontributedtowardsthefailureoftheseSMMEs. not having adequate skills for running a successful business were the most This indicatedahugeeducationalgapinbusinesses. The lackofeducationand participated inthesurveyhadnotcompletedmatricandonly13%matric. The studynotedthatabout40%ofbusinessownersandmanagerswho the reviewperiod. critical inputs for streamlining ECDC’s enterprise development offering during non-financial supportservicesfrom2010/11to2014/15. Thisstudyprovided An impactassessmentstudyassessedthesocio-economicofECDC’s STREAMLINING SERVICE OFFERING owners andmanagersthatformpartofECDCnetworks. clients, walk-ins at ECDC offices throughoutthe province, andsmallbusiness enterprise development support services designed to assist existing loans Therefore, inthereviewperiod, ECDCintensifieditsapproachtowards enterprises. but oneoftheobstaclesthatimpedesustainabledevelopmentsmall its high-performingdevelopmentfinanceaspirations, access tofinanceis While theprovisionoffinanceproductsremainscriticalforECDCtoreach 38+26+27+72 292 ENTERPRISES NON-FINANCIAL SUPPORT financial management accreditation and Other Marketing support Mentorship Creative industries Business planning : training

38% 26% 27%

2% 7% 35

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 36 the 16enterprisesfundedby Departmentof Trade andIndustry’s Sector VisionsBecoming, Thabo MakhetaDesignsandStephanie Besterwereamong in Fiera exhibitionheldinMilan. Keiskamma Art Project, OzzyEcoDécor, To facilitate access to international markets, ECDC hosted the L’artigiano craftsmanship attheRandEasterShowandDecorexJohannesburg. and material. Inaddition, theyshowcasedtheircreationsandinnovative The winnerseachreceivedprizesworthR20000forpurchasing machinery Msukeni DevelopmentfromMount Ayliff wontheaccessoriescategory. the houseandhomecategoryforherChinese-inspiredceramic range. And the fashioncategory. Lisa Walker fromPortElizabethwasnamedwinnerof A women’s co-operative fromEngcobo, LithaLethemba, wasthewinnerof spirit oftheEasternCape. that identifiesgame-changersandcreativedesignsbest representthe and MandelaBayDevelopment Agency, LithubaLakhoisanannualcompetition Initiated inconjunctionwiththeNelsonMandelaMetropolitan Art Museum the EasternCapeHandmadeCollectionduringfestiveseason. held inMilan, Italy, andapop-upshopin Vincent Park, East London, whichsold is Your Chance)EasternCapeCraft Competition, L’artigiano inFiera exhibition up ofactivities, which includedthesecondinstalmentofLithubaLakho(This In thepastyear, thecreativeindustriesprogramme featuredanexceptionalline- 112 craft enterprisesin2015/16through itscreativeindustriesprogramme. development inthecreativeindustriesremainedafocalpoint. ECDCsupported Facilitating access to marketsandassistingenterprises with product FOCUS ONCREATIVE INDUSTRIES of business-relatedmattersduringthree-hourlysessions. membership. The seminarsprovideshands-on, relevantworkshopsonarange implementation. The topicswerebasedontheneedsthatweassessfrom planning, stressmanagement, labourrelations, andstrategy developmentand management, timemanagement, emotionalintelligence, budgetingand 2015, continueduntilOctober2015andcoveredsuchtopicsasperformance The entrepreneurialseries, whichstartedwithworkshopsandseminarsin April youth and32wererepresentativesofblack-ownedenterprises. saw 168 people attending thesesessions; of these, 150 were women, 22 were workshops andseminarsthatwereheldoversevenmonths. The programme series is aimed at supporting chamber membership through empowerment entrepreneurs. Launchedin2014andnowitsthirdyear, theentrepreneurial In addition, theBWA EntrepreneurialSeriescontinuedtoaddimmensevalue Metropolitan University. skills andworkshops. These coursesareofferedthroughtheNelson Mandela your brand, andbasicfinancialprinciplesthroughclassroomtraining, soft selling, supplychainmanagement, communicationandsocialmedia, building area needed. Itcombinescoursecontent inhumanresources, effective business ownerormanagerispairedwithanexpertmentorinthefield an effectivecombinationofmentorshipandskillsdevelopment. Eachsmall First pilotedinthe2014/15yearwith31participants, theprogramme offers review period. has benefited20smallbusinessesthatparticipatedintheprogramme inthe completed theseven-monthprogramme in2015/16. ECDC’s annualinjection The secondintakeoftheNMBBC’s Enterprise DevelopmentProgramme of itssupportservicestoenterprisesthatformpartthesenetworks. Business Women’s Association (BWA) hasenabledECDCtoextendthereach The corporation’s long-standingrelationshipswiththeNMBBCand ASSOCIATIONSBUSINESS CHANGE THROUGH EFFECTING 112 review period. programme inthe participated inthe businesses that benefited injection has ECDC’s annual INDUSTRIES PROGRAMME CREATIVETHROUGH THE SMMEs SUPPORTED

small

INDUSTRIES CREATIVE PROGRAMME 4 112 EXHIBITION INMILAN L’ARTIGIANO INFIERA ATTENDED THE EC-BASED ENTERPRISES SUPPORTED ENTERPRISES CRAFT 37

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 38 • LithubaLakhoCr • IndiaInternational • Gr • EastLondonHomeExpo • EastLondonChristmasPop-upShop • DecorexJohannesburg • DecorexCape Town • Cape Town Jazz Festival 14 exhibitionsandexpos: In thereviewperiod, ECDCfacilitated participationofenterprisesin level ofsaleswereapositiveindicationdemandfortherange. enterprises throughouttheprovince, packagedandpromotedbyECDC. The 2015. The collectionconsistsofproductssourcedfromsome60craft Handmade Collectionpop-upshopin Vincent Park, EastLondon, inDecember Locally, more than R100 000 in sales was generated at the EasternCape with several artgalleries. Best, whichsellsSouth African productsinItaly, andestablishingcontacts of thetripincludedinitiatingapartnershipwithItaliancompany, Cape Specific AssistanceSchemetoparticipateintheexhibition. Positiveoutcomes the day-to-dayprocessingand reportingofacompany’s financialdata. The customisedopensoftware accountingsoftwareisdesignedtoassistin course, participants will receive an accounting management system for free. basic financialmanagement training and, oncompletionofthefive-day The Youth EnterpriseDevelopment Programme, ontheotherhand, willcover enterprises. specialised training willbeidentified toaccelerate thedevelopment ofthese will undergoa360degreediagnosticsexerciseoncurrent operations, and Enterprises selectedforthe Women EnterpriseDevelopmentProgramme months andcovertraining andmentorship. The programmes, tobelaunchedinthe2016/17financial year, willspannine Uitenhage DespatchDevelopmentInitiative(UDDI). development programmes packagedbyECDCinpartnershipwiththe Mandela Bayareastandtobenefitfromthewomenand youth enterprise A totalof40women-ownedandyouth-ownedenterprises intheNelson TARGETINGYOUTH WOMEN AND in Fort Jackson. Similarly, theautomotiveincubatorisoperating fromanECDC-owned factory opportunity costsforemergingfilmmakersandtechnologyentrepreneurs. ECITI beyonditsBuffaloCityMetro-basedheadquartersandforreducing satellite office. OpenedinJune2015, themoveisasteppingstonefortaking Hani District, ECDChasprovidedECITIwithofficespaceforitsQueenstown In anefforttosupportfilmandICT-based smallenterprises intheChris in BuffaloCity. these incubators, bothincubatorsareoperating fromECDC-ownedpremises Besides anannualinjectionofR3.8milliontowardstheoperations of 83 jobs. generated atotalofR11.8million in turnoverandcreatedand/ormaintained the BuffaloCity After Market Automotive Incubator. These enterpriseshave incubator, theEasternCapeInformation Technology Initiative(ECITI), and Consequently, atotalof39enterpriseshavebenefitedfromtheICTandfilm support resourcesandservicesofferedintheincubationhubsnetworks. the successfuldevelopmentofentrepreneurialcompaniesthroughvarious ECDC continuedtosupportbusinessincubatorsasaconduitaccelerate BUSINESS INCUBATION ahamstown National Arts Festival aft CompetitionandExhibition Trade Fair

• • RandEasterShow • LegendsMar • L • KwakuF • KleinKarooNationalK Wild CoastJikeleza ’artigiano inFiera, Milan estival athon Wellness EXPO

unstefees

83 jobs R11.8m TURNOVER 39 programmes youth enterprisedevelopment benefit from thewomenand ENTERPRISES 40 WOMEN-OWNED INCUBATED ENTERPRISES stand to stand to

INCUBATOR BUSINESS SERVICES SUPPORT 34 ENTERPRISES TO JOINICT&FILMINCUBATION ONE OFTENNEWENTERPRISES SUPPORTED BYECDCIN2015/16 SIVUBUHLE MEDIA IN 2015/16 39

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 40 INVESTMENT PROMOTION INVESTMENT PROMOTION INNOVATION, TRADE AND CO-ORDINATION Trade accesstomarketsbeyond South Africa grows 105 YOUTH TRAINED 962 jobs 99 SMME 2015/16 R2.26bn FLOURISHES & ASSISTANCEGIVEN TO FLOURISHES THROUGH ICT&FILM PROGRAMMES CREATEDINVESTMENT THROUGH EXCEEDING TARGET OFR700mBY INTEGRATED EXPORTSUPPORT LOCAL &FOREIGNINVESTMENT 223 SKYROCKETS TO HIGHLIGHTS PROMOTION % S AND TOURISM INVESTMENT RENEWABLE ENERGY Kingdom (14.7%)andUnitedStatesof America (12.7%). days. Most of the arrivals came from Germany (15.4%), followed by the United R2.4 billion, aboutR500millionmorethanin2013, andstayedonaverage 9.5 The 304888foreigntouristswhovisitedtheEasternCapespent anestimated R3 billionintotaldirectvalue2014. travellers took3.2milliontripstotheEasternCape, spending anestimated Cape Annual Tourism Barometer2015, producedbyDEDEAT, South African favourite withSouth African travellers. According totheinaugural Eastern Tourism remainsa critical sectorfortheEasternCape, whichremainsa and issues, communityengagementandlinkingwithbusinessnetworks. province inseveral ways, includingassistancewithenvironmentalplanning of understandingin2010. The corporation assistedtheinvestoracross ECDC hasengagedwithInnowindsince2008andsignedamemorandum Komga), Waainek (nearGrahamstown) andGrassridge (nearPortElizabeth). in threelargewindfarmstheEasternCape. These farmsare Chaba(near The 2015/16financialyearsawsubstantialinvestmentbyInnowind(Pty)Ltd MILESTONES electricity every24hours. three tofiveyears, itwillbeabletogenerate anaverage ofeighthours Within ashortperiod, theprovincehascreatedamulti-billionsector. Within our closestcompetitor. conditions intheworld.NewZealandis globally ashavingoneofthebestwind wind sector. The province isacknowledged Cape’s attractivenessinthecompetitive The latestinvestmentsaffirmtheEastern energy project. in 16windprojects. The provincealsohasinvestmentinasolarrenewable Eastern Cape is the clear leader in wind energy, having secured investment Cape, whichhasoutstandingsunshinethroughouttheyear. However, the The renewableenergysectorintheprovinceissecondsizetoNorthern 962 much-neededjobsintheprovince. The investments, mostnotablyintherenewableenergysector, created Phakisa initiatives. which includesacoastalmanagement plan, leverages thecurrentOperation marine andtourismmulti-year strategy onbehalfofDEDEAT. The strategy, In ordertoattract touriststotheprovince, ECDChasdevelopedaprovincial MILESTONES

16 962 304 888 R2.4bn R500m morethanin2013 WIND PROJECTS JOBS CREATED AVERAGE SPEND FOREIGN TOURISTS 41

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 42 3 INNOWIND INVESTMENT GRASSRIDGE (NEARPORTELIZABETH) WAAINEK (NEARGRAHAMSTOWN) ENERGY WIND PROJECTS R1.8b WIND CHABA (NEARKOMGA) INVESTMENT FARMS WIND 16 missions, andtrade-related andexport-relatedinformationtraining. initiatives andofferings, whichincludetrade leadfacilitations, trade showsand export desksassistnew, emerging or existingexportersinbenefitingfromthe desks inNelsonMandelaBayandBuffaloCitybeingfullyoperational. These 147 SMMEs, exceedingitstargetby186%. This isduelargelytotheexporthelp- In thepastfinancialyear, ECDCprovidedintegrated exportsupportto MILESTONES equipment, pharmaceuticalproducts, beverages, spiritsandvinegar. 2015. Othermajorexportingsectors included rubber, electricalmachinery and a thirdoftotalprovincialexportsto Africa comingfromvehiclesandpartsin The automotivesectorcontinuedtobeanexcellentperformerwithmorethan past twoyears. the Southern African DevelopmentCommunityregiontoR4.8billionoverthe processing productsintheUSmarket. The EasternCapegrewitsexportsto The Africa GrowthandOpportunity Act remainsastrongleverforagro- that arefavourable forEasternCape exportsinthesemarkets. snacks. This isinlinewithrisingincomelevels. There arealsotrade agreements chillies, pastries, cereals, processedmeats, bottledwater, energydrinksand is mainlyforfoodproductsinprocessedform, suchasjams, cherrypeppers, The demandinthesetargetmarkets, especiallyinthedevelopingeconomies, processes wereprioritised. manufacturing, creativeindustries, ICT, construction, engineeringandbusiness In thepastyear, enterprisesinvolvedinagricultureandagro-processing, markets, suchasEuropeandtheUSA. while maintainingapresenceanddeepeningpenetration intraditional Kong andMacau)theMiddleEast(inparticularUnited Arab Emirates) Beyond Africa, themarketaccess unit targeted Asia (specifically China, Hong offered byvarioustrade policiestobroadentrade withinandoutside Africa. In this regard, ECDC’s market access outfit maximises the opportunities investigating thepossibilitiesofexportmarketisnon-negotiable. export supportmechanismsandincentivestolocalentrepreneursthose In aglobalisedeconomicenvironment, the imperative toprovideempowering global scale. entrepreneurs toensuremarketreadinessoftheirproductscompeteona export supportprogrammes aimedatimprovingthecompetitivenessoflocal In ordertoleverage theseopportunities, ECDCcontinuedtoprovidevarious continues topromoteeasiertrade accesstobusinesseswithintheprovince. As animportanttoolforeconomictransformation andgrowth, ECDC TRADE PROMOTION

outside trade withinand policies tobroaden by opportunities of maximises the access ECDC’s market R4.8bn COMMUNITY DEVELOPMENT SOUTHERN AFRICAN EXPORTS TO

various

outfit Africa.

trade

fered fered

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 44 are activeparticipantsinthefullyinclusiveeconomy. Dimbaza eco-industrialpark. The parkwillensurethatenterprisesinthearea An agro-processingparkwillbedevelopedthrougharevitalisationplanforthe investment intheregion. strengthen variouscommodityvaluechainswhilefacilitatingdownstream the developmentofanagro-industrialpark. The projecthasthepotentialto near King William’s Town, theEastLondonIDZhasidentifiedalocationfor processing companytoestablishaR85millionmulti-userfacility. InBerlin, Industrial DevelopmentZone(IDZ)signinganagreementwithasugar The provinceismakinginroadsintheagro-processingfieldwithCoega municipality areas. and blackchicoryproducersintheNdlambe, MakanaandNgqushwalocal R5 millioninfunding, whichwenttoramping upproductionbyChicorySA the signing of an memorandum of understanding with Nestle, supported by In the2015/16financialyear, thechicoryindustrywasrevived, inpartthrough three millionatleast–inthehandsofrural householdsandemergingfarmers. Research hasshownthattheEasternCapehighestnumberofcattle– AGRO-PROCESSING The RED hub has created a platform for economic activity, resulting in and surrounds, beganin2015. within theregionandatselected distributionpoints, likeKing William’s Town The maizeismarketedunder theI-Spazacommunitybrand. Distribution kaff, wholemaize, stock feedanddirtymaize. Other productsthatwillbeaddedtotheproductline-upinclude finesamp, operational afterbeingconnectedtotheelectricitygrid. operational forsometime. Morerecently, Ncorhamovedtotowardsbeing produced. RefurbishedmillscanbefoundinMqanduli, andthesehavebeen Nzo municipalareasmakeupthemega-farmwheremaize orsorghumis More than3700hectaresoflandintheChrisHani, OR Tambo and Alfred Mqanduli undertheDevelopmentBankofSouthern Africa’s JobsFund. In partnershipwithECRDA, ECDCisimplementingREDhubsin Ncorha and community. Othermarketingchannelsareusedtosellexcessproduce. from thevaluechain. Lastly, marketingallowsfarmerstoselltheirproducethe scale. These cropsarethenprocessedinthecommunityordertoderivebenefit Maize orsorghumisgrownandproducedinthecommunityatasustainable elements: production, processingandmarketing. The core functions of the RED hub are built around the support of three productive clusters. fallow rural communityland. Inthisway, dormantassetsareturnedinto a mega-farmconcept, whichcomprisesofviableeconomicunits, using The EasternCaperural enterprise development(RED)hubisbasedon DEVELOPMENT (RED)HUB RURAL ENTERPRISE

R2.45m 3 700ha as atend April 2016 TOTAL SALES MEGA-FARM MAIZE/SORGHUM of newafforestationby2033. partners in thefiveprojects andthiscouldleadtoafurther30000hectares Big privatesectorforestryplayers, SappiandPGBison, havebeensecuredas youth. Furthermore, 525employeeshavebeentrained. To date, 819jobshavebeencreated; 60%ofthesejobshavebeenfilledby a further6600hectaresiftheadditionalareasareapproved. Already, 2700hectares has been plantedwithmaize, withexpansionplansfor MILESTONES providing monitoringsupport. departments, communities andprojects; implementingthe project; and involvement and support; engaging authorities; providing support to various to development; leveraging andprovidingfunding; facilitatingthird-party ECDC playsakeyroleintheproject. This includes: addressingblockages ECRDA haveeachinvestedR30millionintheproject. its JobsFund, whichhascontributedR83milliontotheinitiative. ECDCand Other funders include the Development Bank of Southern Africa through Maqhubini inQumbu; andSiphaqeniinFlagstaff. Maclear. Three morelocationsareunderconsideration: LambasiinLusikisiki; in Mbizana; MkambatiinFlagstaff; GqukunqainQumbu; andSixhotyeniin The projectcomprises9380hectaresacrossfivelocations: SinawoandIzinini Eastern CapeRural Development Agency (ECRDA). ECDC hasco-fundedamajorforestrycommercialisationinitiativewiththe FORESTY A livestockmodel, basedonthemaizemodel, isunderway. becomes operational. It isestimatedthatsaleswilldoubleoverthenextyearasnewmachinery by buildingacompetitive, sustainableagro-processingvaluechain. which hasimprovedthecompetitivenessoftargetedrural communities Ncorha andMqandulisites. Further, salesofmaizemealcontinuedunabated, More than 115 permanent jobs have been created from 2014 to date at the averaging R153000. As attheendof April 2016, salestotalledR2.45millionwithmonthly region, complementingexistingmillgatesales. unbranded products, mealandstockfeedstarted. Salesexpandedintothe in 2014andopenedformillingDecember2014. Shortlythereafter, salesof The millwasupgraded andthetwosilosof750tonseachwerereconstructed MILESTONES of therural economy. of acommunalandexternalmarket. These makeupthebasic “value chain” promoting rural savings, investmentandprocessing, as well as the creation increased rural incomesthroughthefacilitationofprimaryproductionand 819 115 9 380ha JOBS CREATED CO-FUNDED INITIATIVE JOBS CREATED 60 by YOUTH % filled 45

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 46 ICT ANDFILM Eastern CapeCommunityMedia Forum. training programme. This intervention wasajointeffortbyECDCandthe various localcommunitymedia housesparticipatedinatwo-dayproduction by MICTSETA accreditedNEMISA. Another groupof13people drawn from 68-credit Filmand Television ProductionOperations programme offered In termsoffilmandtelevision production, 50youngpeoplecompleted the services ofMICTSETA accreditedZealotBusinessCollege. 131-credit fullqualificationinITEndUserComputingusing theprofessional is accredited by CISCO. Another group of 19 young people completed the In addition, a total of 32 people completed the Get Connected IT course which meant toensurethattheycouldrentaccommodationwhile werestudying. In thisfour-month period, theyouthalsoearnedmonthly stipendswhichwas from August 2015toJuly2016. Furthermore, 39ofthe 67trainees received12-monthemployment contracts & Communication Technologies SectorEducation& Training Authority). July 2015. The programme isaccreditedbytheMICTSETA (Media, Information All 67Monyetlabeneficiariesparticipatedinafour-month training from Aprilto these trainees werepartoftheMonyetla Work ReadinessProgramme. the 2015/16financialyearthroughitsfilmandICTprogrammes. Sixty-sevenof A totalof105youngpeoplewithinthe18-35years’cohortwastrained during and moderators tosecurefreelance jobs. creation ofdownstreamopportunitiesforlocaltraining facilitators, assessors ECDC’s vestedinterestinsupportingsmallbusinesseshasenabledthe College andtheNationalElectronicMediaInstituteofSouth Africa (NEMISA). appointed torolloutthetraining programmes, namely; Zealot Business Through thisinitiative, twoMICTSETA-accredited serviceproviderswere Four youngpeoplewere alsorecruitedbyECDCasin-housetraining facilitators. well asproductionequipmentforfilmand TVproductiontraining programmes. suite ofover20training programmes. Itboaststraining facilities forITtraining as recognised byCISCOasatraining academy andhasaccreditationtodelivera ECDC isproudtoreportthattheEasternCapeLocalContentHubnow accreditation asatraining venuewas atoppriorityinthereviewperiod. in thisspace. Hence, ensuringthattheprojectofficemetcriteriafor London’s central businessdistrictisattheheartofECDC’s interventions The Eastern Cape Local Content Hub, located at 33 Church StreetinEast Television ProductionOperations. Cisco Training -GetConnected, ITEndUserComputing, aswellFilmand three accredited training programmes offered in the review period, namely; Through Monyetla, thecorporation intensified itstraining programmes with Southern Africa. contribution fromtheNationalSkillsFundandDevelopmentBankof employment opportunities. The programme iscapitalisedthroughajoint profiles ofunemployedyoungpeopleinordertopreparethemforentrylevel between theagesof18and35years. Itisdesignedtosharpencompetency school leavers, unemployed graduates, women, disabledpeopleandyouth A programme ofthedti, Monyetlahasbeenrunningsince2008andtargets Cape forthe2015/16financialyear. ECDC wastheonlyapprovedparticipantofprogramme intheEastern to thedtiparticipateindepartment’s fundedMonyetlaprogramme. The four-month programme cameasaresultofsuccessfulECDCapplication of thelearnersarewomenwhiletwopeoplewithdisabilities. offered 12-month fixed-termcontracts ofemployment withECDC. Some75% Drawn fromthemainlyrural areasoftheprovince, 39ofthegraduates were run byECDCthroughitsEasternCapeLocalContentHubinSeptemberlastyear. graduation of67learnersfromtheMonyetla Work ReadinessProgramme PhaseIV The localfilmandinformationtechnologyindustryreceivedaboostwiththe MILESTONES

years. ages of18and35 youth disabled peopleand graduates, women, leavers, and tar running since2008 Monyetla YOUTH TRAINED TRAINING MONYETLA GRADUATES 75 WOMEN 105

between gets school

% unemployed

has

been

the

ACCREDITED ACCREDITED PRODUCTION OPERATIONS CISCO -GETCONNECTED, IT END USER COMPUTING IT ENDUSERCOMPUTING FILM AND TELEVISION FILM ANDTELEVISION TRAINING 105 YOUTH TRAINED PART OFMONYETLA WORK READINESS PROGRAMME 67 TRAINEES THROUGH FILM&ICT PROGRAMMES 47

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 48 RISK CAPITAL 614 jobs RISK CAPITAL FOOTPRINT IN MINING 2015/16 PROJECTS GROWS INNOVATIVE TECHNOLOGY INNOVATION JOB GROWTHMATCHES LAST YEAR’S AGENCY COLLABORATION DESPITE BUDGETBEINGHALVED Pineapple wasteinnovation expands STRONG PIPELINEFOR EXCITING,& VIABLE CONTINUES HIGHLIGHTS FACILITY RISK CAPITAL FACILITY by theunitleaptto614. In whatshouldbeheralded asahugemilestone, thenumber ofjobscreated administration andothersupportto thisriskcapitalstream. by R5milliontoR11million. ECDCreciprocated, rand-for-rand, byproviding technological innovationintheEasternCape, bolsteringtheoverall budget However, the Technology Innovation Agency (TIA)continueditssupportof delayed attheduediligencestage. investment of R60 million by the Industrial Development Corporation was also to R30millionbeingdelayedforthebio-digesterproject. A KarooCatch R19.8 million(79%)fromthepreviousyear’s R92million. This wasduelargely This contraction wasalsoresponsibleforthird-partyfundingfallingto budget felltoR6million, a40%declinefrom2014/15. In the year under review, due to contracting budgets in government, the unit’s creation and/orsavingofjobs. to establishviableenterprises, expansionofexistingbusinessesandthe The intentionisthatthesewillleadtocrowdinginofprivatesectorcapital impact assessments, orcostlywaterandmininglicenseswhennecessary. market surveysandregulatorycompliancecosts, suchasenvironmental capital” tofacilitatefeasibilityresearch, prototypedevelopmentandtesting, and non-financialsupport. Principally, theunitalsousesits “patientrisk underdeveloped blackindustrialisttalentbyprovidingtherequisitefinancial Risk capital is seen as a viable conduit for cultivating the pipeline of existing yet particularly whenthereturnswilltakesometimetocomefruition. fellow funders. Someresultinrisk-savvyarrangements likeequityagreements, potential, sourcingadditionalfundingfrom ECDC’s financeunitand/orother assists withdevelopingbankablebusinessplansforconceptsthathold entrepreneurs, areprovidedwithmedium-tolong-termsupportasECDC The ideas, thebrainchildren ofanexcitingnewgrouphome-grown Port Elizabethareprioritised. income areas outsideoftheconcentrated economichubsof East Londonand Projects withasocio-economicandgeographic biastowardsremotelow- manufacturing, infrastructure, tourism, ICT, filmandmining. processing, medicinalandaromaticplants, renewableenergy, petrochemicals, of ground-breaking ideas in a diverse array of selected sectors, such as agro- ECDC’s riskcapitalunithascontinuedto forgeaheadwiththedevelopment with aroadconstructioncompany, whichistobuildanew14km roadfrom In thepastyear, BlueCrane Miningsecured aR30millionofftakeagreement products, non-standardrockandcrushproducts. stone products, crushersand, specialisedroadstoneandbasecourse Now initssecondyearofoperation, theminesuppliesstandardconcrete 1 000hectaresitefordevelopmentandmining. to develop a geo-tech survey and business plan and prepare an additional Indwe intheEasternCapewithfundingofR736000. This fundingwasused ECDC hashelpedestablishandexpanda200hectareaggregate minein BLUE CRANEMINING

R736 000 non-financial financial the requisite talent black industrialist yet pipeline ofexisting for cultivatingthe as aviableconduit Risk capitalisseen Budget felltoR6m ECDC INVESTMENT BUDGET

underdeveloped

40 by

and providing

support.

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 50 the projecttoincludeproduction ofpolyfibrefurnitureandbags. convert itsexistingR2.5million fundingtoequity. The corporation isexpanding The plantis33%ownedbythe buy-backcentreco-operatives. ECDCplansto RDP houses. Settlements indicating that it would be interested in acquiringfurniture for Interest inthepolyfibreprojectshasresultedDepartment ofHuman then soldontoawasteprocessingcompany. pineapple leaves, joined theventure. Both theplasticandpineapplewasteis Later, a woman’s co-operative in Port Alfred, which collects waste from disposal sites. to fundtheestablishmentofbuy-backcentreslocatednear solidwaste ECDC firstbecameinvolvedintheprojectwhenDEDEAT askedthe corporation Grahamstown andPort Alfred. and three buy-backcentres inStutterheim, establishment ofthefactoryinPort Alfred Employment Creation Fundfor the the Departmentof Trade andIndustry’s further bolstered withR22millionfrom with R2.2million. The project was To date,ECDChasfundedtheproject of utilitybags. used inthemanufactureofwindowanddoorframes, furnitureandarange The fibre, whichisacombinationofpineappleandplasticwaste, isbeing it closertothecommercialisationphase. South African BureauofStandardscertificationforthematerial, whichmoves In alandmarkdevelopment, theECDC-fundedpolyfibreprojecthasreceived WASTE BAGS PLASTIC PINEAPPLE AND project withR4million. stone totheLibodeon-siteplant. OldMutual’s MasisizaneFundco-fundedthe owned companytobuyexcavatorsandtippertruckstransport thecrushed in theOR Tambo region. ECDC’s R1millioninfundingallowedthewoman- such asslabsandpaving, andsupplies anationalhardware’s eightstores Established inMthatha2013, Incapeace Trading makesconcreteproducts, TRADING INCAPEACE the roadsinregion. a manufacturingplantattheminetoproduceroadsurfacematerialspave and theChrisHaniDistrictMunicipalitytosetupajointventureestablish Currently, thecompanyisindiscussions withtheeMalahleniLocalMunicipality for 1500ReconstructionandDevelopmentProgramme (RDP)houses. contract with the localmunicipality with aggregates worth about R27 million Indwe totheElithenicoalmine. The companyisalsonegotiatingasupply

R1m R2.2m ECDC INVESTMENT ECDC INVESTMENT HARRISON WINE FARM HOPE FIRST WINEESTATE EASTERN CAPEPROVINCE’S R750 000 ECDC INVESTMENT 51

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 52 R500 000 ECDC INVESTMENT HEAT RAIDER TECHNOLOGY SYSTEMS TO HEAT WATER INGEYSERS REFRIGERATION/AIR CONDITIONING THE HEAT RAIDERUSESRECYCLED RENEWABLE ENERGY WASTED HEAT GENERATED FROM • • • Two otherinnovationprojectsfunded intheEasternCapeare: • • • Five projectsarelocatedinPortElizabeth. These are: • • Projects residentattheEastLondonScienceand Technology Park are: 10 enterprisesintheEasternCape. In theyearunderreview, the Technology Innovation Agency (TIA)hasfunded INNOVATIONTECHNOLOGY AGENCY the EasternCapeasanewwineregion regulatory bodyinSouth Africa, certifying Information &SystemsNPC,thewine with theSouth African Wine Industry 2009 vintagesmarkedanother milestone Plot Vineyards inthe Western Cape,the Incubated from theGenesisandEmma and merlotcultivars. harvest withaselectionofwhiteandredwinesfromchardonnay, pinotage estate, establishedin2006. Three yearslater, theestateproduceditsfirst ECDC hasinvestedR750000inextendingandrenovatingthe Whittlesea HARRISON HOPE employs fivepeople. originated in Turkey. Currently, theoperation islocatedinPortElizabethand every fourmonths. Angora isoneoftheoldesttypesdomesticrabbit and Angora rabbit haircanbeharvested, withoutanyharmtotheanimals, Northern Hemisphere. long, soft rabbit wool, which hassignificant medicinalproperties, to the R850 000. The projectaimstoexportgarmentsthatareproducedwiththe ECDC hasfundedanangora rabbit pilotprojectintheEasternCape with ANGORA RABBIT FIBREPILOT • •

to shortentheprocessoffermentationfrom14daysfive days. technology-based marketingcomputersoftwareprogramme University inGr BM Manufacturing, at the Sunr The Bio-F software programme (completeproject managementpackage) P software andhastargetedEskommunicipalitiesasmain buyers Computer SkillsInitiative Uvimba FinancialGroup UmoyAir system such aswaterheating waste heatenergyfromboilersandrefrigeration systemstootheruses, solar energy. T Coastal Heat RaiderSystems athost Web Hosting, isspearheadingthedevelopment ofabuiltenvironment werly Lights, whichhasdevelopedstreetlightspoweredbywindand aider Energy, whichisdevelopingasolargeysersystemandlocated TIA Technology Park inCambridge(Chiselhust)Buffalo City Innovations, which developed a dual valve solid waste drainage ermentation Reactor, whichisusing technologythatisdesigned Communications, which has developed an information ahamstown. whichisawaterfiltration technologylocatedatRhodes , whichhasdevelopedtechnologythatre-directs , withitselectricityvendingsoftwareprogramme , whichhasalsodevelopedanelectricityvending .

the EasternCape. 10 enterprisesin (TIA) hasfunded Innovation the under review In R750 000 R850 000

ECDC INVESTMENT ECDC INVESTMENT the

T echnology

year

Agency ,

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 54 2015/16 NNCR )SALES (NON-CORE RENTAL COLLECTIONS RENTAL COLLECTIONS ARE STABLERENTALCOLLECTIONS ARE AT R5.1m returns of12%to15% inthemediumterm Improved propertystructure willhelpunlock PROPERTIES RESIDENTIAL R69.5m 46 ROSE TO HIGHLIGHTS % PROPERTIES municipalities inordertofast-track transfers. Rezoning delayshavealsobeenaddressedthroughECDCrelationshipswith solutions basedoneachtenant’s uniquecircumstances. continued to engage them, case by case, in finding the most progressive home ownershiptoitstenants, particularlyitslong-standingtenants, and Notwithstanding thesechallenges, ECDCremainscommittedtotransferring in trustpendingtheconclusionofconveyancing. Sales ofR3.9millionfor15housesareatadvancedstageandbeingheld in 2015/16. resulted in a disappointing portion of the R6.8million in salesbeingrealised clients’ inabilitytosecurehomeloanfinancingandrezoningdelays. This However, theprocesswasnotwithoutitschallenges, which includedsome R5.1 millionsalesbeingresidentialpropertythathavebeenconcluded. During theyearunderreview, thisprojecthasmadesignificantprogress, with located largelyintheeasternpartofprovince. corporation movedtodisposeofallitsresidential(non-core)properties, In ordertounlockfurtherrevenuesfromtheECDCbalancesheet, the DISPOSAL OF NON-CORE ASSETS Town tenantsslightlyoutperformedthoseintheotherareas. Across theresidentialandcommercialproperties, Komani andKing William’s Commercial tenantsmadeupthegreaterportionofpayingtenants. towards theendoffinancialyear. stable butlacklustreat46%withsomeencouraging improvementcoming King William’s Town andKomani (Queenstown), collectionshaveremained For residential, commercialandindustrialpropertiesinButterworth, Mthatha, year’s collections. rental collections, whichrosetoR69.5million, up13.9%on theprevious In theyearunderreview, bettermanagementbyECDCresultedinpleasing was finalisedin2015/16andwill beissuedbeforeend August2016. The terms of reference for the request for proposal to invite private developers well astherefurbishmentofitsmajorretail, commercialandresidentialstock. agreements forthedevelopmentofitsvacantlandinandaround Mthatha, as ECDC is also considering partnering with private developers on long-term lease PROPERTY DEVELOPMENT on waterandelectricityrecoverieswhenitisfullyimplemented. 2015/16 financialyear. Thetechnologyshouldprovidemuchneededefficiencies In addition, testsonanewsmartmetertechnologyconceptweredoneinthe while managingthecostsassociatedwithsuchinvestments. to boostthemediumlongtermrevenuegenerated byECDC’s properties In theyearunderreview, ECDCestablishedafacilitiesmanagementunittasked FACILITIES MANAGEMENT R5.1m year on theprevious million, up13.9% rose toR69.5 collections, which in pleasingrental ECDC resulted management review In

PROPERTY SALES RESIDENTIAL the ’s

year , better collections.

under

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 56 STRATEGIC PROJECTS REACHED WITHDEPARTMENT 2015/16 MAKANA WATER PROJECT MANAGEMENT OFFICEFOR THE NEXT parts ofdelivery its busdepots Corporation toimplement refurbishmentsto Skills andSMMEdevelopment arecritical Secured agreementwithMayibuyeTransport LANDMARK AGREEMENT schools project R98.2m TO MANAGE ITSPROGRAMME R195m PHASE ONECOMPLETED OF EDUCATION underway THREE YEARS HIGHLIGHTS STRATEGIC PROJECTS plumbing, plastering andcarpentry. In thecaseofFlagstaffproject, 11formerpupilsweretrained inbricklaying, Twelve internsareundergoingtheir in-servicetraining withallthreeprojects. were awardedthebusiness, andmorethan700jobshavebeencreated. Grade 7ConstructionIndustryDevelopmentBoard-registeredcontractors Already these projects have hadsignificant socio-economicimpact. Black offices, newguardhouse, andnewablutionfacilities. hall, computerlab, sciencelabandmulti-purposehall, nutritioncentre, HOD in Tsolo, willincludeninenewclassrooms, anewadministration block, new The upgrade tothesmallestofschools, DilizintabaSenior SecondarySchool facilities, andnewpathways andcoveredwalkways. workroom, anutritiondiningroomandkitchen, aguardhouse, 29ablution a multi-purposeclassroomwithstores, twoHODofficeswithteachers’ plus anHODofficeblock, arefusehouse, atemporary staffroomandkitchen, classrooms, anadministration block, amediacentrewithstores, asciencelab the projectincludesconstructionof12newclassrooms, threeGrade R At thelargestschool, PlangeniHighSchoolinMbizana, with1107learners, ready forits1105learnersinthenewschoolyear. covered walkways. The schoolwillbethefirsttocompletedandshould and kitchen, a guardhouse, 19 new ablution facilities, and new pathways and head of department (HOD) offices with a teachers’ workroom, a diningroom with stores, amulti-purposeclassroomwithstores, asocialscienceroom, two classroom, anadministration block, amediacentrewithstores, asciencelab the projectincludesconstructionofeightnewclassrooms, aGrade R At theoldestofschools, the92-yearoldFlagstaffComprehensiveSchool, than 3000learners. due forcompletionearlyin2017. Oncompletion, theschoolswillhousemore The three-schoolproject, valuedatR195million, isalreadyunderwayand understand thecurrentstateofschoolsandinfrastructure required. OR Tambo, Amathole and Alfred Nzodistrictmunicipalitiestomorefully This follows the unit’s initial assessment of 79 schools in the Chris Hani, part oftheEasternCape: inFlagstaff, Tsolo andMbizana. Currently, theunitismanagingbuilding ofthreeschoolsintheeastern One ofitsbiggestclientsistheEasternCapeDepartmentEducation. Municipality andMayibuye Transport Corporation. Clients includedtheEasternCapeDepartmentofEducation, MakanaLocal education, waterandtransport. The focus of the much-needed infrastructure during the past year included Eastern Cape. local businesses and businesses that wish to establish a footprint in the development andcreate, saveorretainjobs, particularlywithdistressed social infrastructure deliveryprogramme (ISIDP)unit, aimstodrivesocial ECDC’s implementationofsocialinfrastructure, throughitsintegrated a rolethattheprovincialgovernmenthasentrustedtoit. infrastructure programme andanumberoflarge-scale/megadevelopments, ECDC continuedwithitsimplementationoftheprovince’s integrated

700+ R195m water andtransport. included education, during infrastructure much-needed The focusofthe Dilizintaba SeniorSecondarySchool Plangeni HighSchool Flagstaff ComprehensiveSchool THREE-SCHOOL PROJECT JOBS CREATED

the

past

year

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 58 and DEDEAT. Park beingupgraded, isbeingundertakenincollaboration withthedti The multi-millionindustrialparkupgrade, whichwillseetheMthathaIndustrial cut fencing, whichwillprovidefurtherprotectionfortenantsandinvestors. is tohavenewsecurityinstalled. This upgrade willcomprise non-climb/non- Park intheBuffaloCitymunicipalarea. LocatedoutsideEastLondon, thepark The unitisassistingECDCwiththeupgrading oftheFort Jackson Industrial planning stage. financial year andtheother twowere at construction stageattheendof2015/16 budget, thefirsttwoprojects were at Zwelitsha. With anestimatedR16million Komani (Queenstown),Reestonand renovation offour busdepotsin Alice, Corporation withanupgradeand ECDC isassistingtheMayibuye Transport loss control. raw waterrisingmains, plantproduction, andsupplycapacitywater completed. Itconsistsofelectrification, majorpumpstationcapacitation, a R98.2millionwaterprogramme. The firstphaseoftheprogramme hasbeen In Makana, theunitworkedwithwater utility, Amatola Water, toimplement facilities andpropertymanagement. management, socio-economicandenterprise developmentdeliverables, and Services includeplanningandmonitoring, projectandprogramme programme managementoffice. project managersandengineers, arehelpingbuildthedepartment’s 21 ECDCprofessionals, includingcharteredaccountants, quantitysurveyors, A comprehensive range of project management services, with a team of allocation overthreeyears. for the 2016/17 financial year and which amounts to an estimated R4.6 billion overseeing morethan1400projectswithanallocatedbudgetofR1.7billion office withinitsinfrastructure unitforaperiodofthreeyears. Thisofficeis unit hassignedacontract toestablishandmanageaprogramme management In anotherprojectwiththeEasternCapeDepartmentofEducation, theISIDP small businesses. projects. InthecaseofPlangeni, 35%ofthebudgethasbeenallocatedto In addition, 34SMMEshavebeencontracted fortheDilizintabaandFlagstaff

R16m CORPORATION UPGRADE MAYIBUYE TRANSPORT MAKANA R98.2m COMPLETE RAW WATER RISINGMAINS PROGRAMME PHASE 1 WATER LOSSCONTROL MAJOR PUMPSTATION WATER PLANT PRODUCTION SUPPLY CAPACITY ELECTRIFICATION CAPACITATION 59

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 60 06 REPORT RESOURCES HUMAN 61

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 62 HUMAN RESOURCESREPORT ePerformance andisstillintheprocessofenhancingperformanceculture. performance. Intheyearunderreview, ECDCcontinued with theembedmentof ECDC adoptedtheBusiness Balanced Scorecardasa tool formanagementof PERFORMANCE MANAGEMENT development, propertyinvestmentandfacilitiesmanagement. revised corporate planthatrefocuses thepropertiesunittowardsproperty during the 2015/16financialyear. ECDCreviewedthestructure inlinewiththe The organisationalstructurewascompletedandapprovedbytheboard STRATEGY TO STRUCTURE ALIGNMENT implementation ofthemodel. performance andinstilacultureofservicedeliveryexcellencethroughfull South African BoardforPeoplePractices (SABPP), toachieveoptimum ECDC decidedtoadopttheHRcompetencymodel, asframed bythe motivated employeesimbuedwithexecution-basedvalues. customers, itisimportantforECDCtocreateacadreofwell-trained and In ordertodeliveronitsstrategy, aswellprovidesuperiorserviceto excellence. human capitalsolutionstoECDCfocusedonqualityandcustomerservice The purposeofthehumanresources(HR)function is to provideintegrated STRATEGIC HR FOCUS Staff profile asat31March 2015 TALENT MANAGEMENT Vacancy rate Vacant positions Less: Actual positionsfilled TOTAL STAFF ESTABLISHMENT Staff turnoverrate Total employeesattheendofperiod Contract employees Total permanentemployeesattheendofperiod Less: Resignations Add: Recruitment Permanent employeesatthestartofperiod ECDC staff turnover Bargaining unit(Grade 2-15)=18 Management (Grades 16-25)=8 Bargaining unit(Grades 2-15) Management (Grades 16-25) Expiry ofcontracts Retirements Dismissals Deaths 4.45% 4.45% Actual 8.9% 1.2% 1.2% 191 173 171 173 173 0% 18 2 0 1 0 1 2 2 173 8.9 improved drastically. rate forcriticalpositionshas one vacantposition. The vacancy At regionallevel thereisonly has improved inthecorporation. Improvement from lastyear’s 13.6% excellence. customer service on ECDC focused solutions tothe human capital provide integrated function isto human resources The purposeofthe TOTAL EMPLOYEES VACANCY RATE LEADERSHIP

quality

CAPACITY and %

CCEP3.4 .2 .2 .8 42%18%024%00100% 0 0 2.44% 0 1.83% 54.26% 4.88% 1.22% 6.5% 1.22% 3%below 34.14% VARIANCE ECDC EAP TOTAL • • • • sustain thepositiveprogressmadeinrespectofemploymentequity: ECDC willfocusonthefollowinginitiativesinyearaheadto EAP PROVINCIAL levels Occupational Employment equitytargets will bereportedonanannualbasis. guiding principletothe strategy, thefollowingreflectECDC targets, which ECDC’s employmentequitycomponents is performedonaregularbasis. As a account thedemographic character oftheEasternCape. A comparisonof is equitable consideration of all groupings within the population taking into The keyintentofemploymentequitywithinECDCistoensurethatthere EMPLOYMENT EQUITY STRATEGY

Integr Reviewing anddevelopingtheemploymentequitystr Embedding theuseoftargetsettingandmonitoringtools Developing acomprehensivedisabilitymanagementstr interventions. ating andaligningemploymentequityinterventionswithculture 42 Disabled Temporary Unskilled Semi-skilled Skilled supervision Senior management Top management African 9 .%04 .%3%55 .%48 100% 0 0 4.8% 0.4% 5.5% 35% 5.7% 0.4% 7.7% 39% % 62288 164 0 0 4 0 3 89 8 2 2 56

Coloured

below 69

8 2 2 57

Male WHITE INDIAN COLOURED AFRICAN

ninWieAfrican White Indian above 1% 11 36 14 0 3 1 4 ihn 17% Within above ategy until2017/18 ategy Coloured below 4.3% 58 Female Disabled Temporary Unskilled Semi-skilled Skilled supervision Senior management Top management % ninWhite Indian 2.4% 0 104

below Source: StatisticsSouth Africa (May 2015) 4 0 3 97

WHITE INDIAN COLOURED AFRICAN

Foreign nationals

aeFemale Male 0 0 50 37 0 3 5 6 3 Total 63

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 64 13+24+30+1518 Conference 2nd Annual CityDevelopment Records Management Advanced ElectronicDocument& Training programme Kei RegionalConference Institute ofInternal Auditors Border owned EnterpriseforExecutives Masterclass ofRestructuringState- Boardroom HR Future-Women andthe Governance Advantage Training 17thCorporate Standards oftheSABPP Presentation, Implementation& 05IMAAna ofrne000010001 0 0 0 1 0 0 0 0 2015 IRMSA Annual Conference CCMA Rules Export/Import TrainingCourse Ceremony Africa SMMEConference& Award Course Health &SafetyRepresentative Construction Contracts Mastering Engineering& FASA Convention upyCanMngmn riig60001 18 0 0 0 12 0 0 0 6 Supply ChainManagement Training Number ofstafftrainedperraceandgender STAFF TRAINING The average ageatECDCis45years 56 -60 51 -55 46 -50 36 -45 25 -35 BY AGE STAFF BREAKDOWN

13% 18% 15% 30% 24% African 2 0 0 0 1 0 0 0 1 3 0 0 0 2 0 0 0 1 4 0 0 0 2 0 0 1 1 3 0 0 0 1 0 0 0 2 1 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 1 12 0 0 0 8 0 0 0 4 1 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 1 2 0 0 0 0 0 0 0 2 1 0 0 0 0 0 0 0 1 7 0 0 0 0 0 0 0 4 2 0 0 0 2 0 0 0 0 88+4+7+1 BY RACE STAFF BREAKDOWN African White Indian Coloured Coloured

Male

88% ninWieAfrican White Indian 7% 1% 4% 58+15+11+8 Coloured PER DEPARTMENT STAFF COMPLEMENT CEO’ Legal services Oper Finance Corpor Female s office ations ate services

ninWhite Indian

11% 58% 15% 8% 8% Total 36+64 • • CHALLENGES • • • and theseinclude: performance excellence. A numberofkeyinitiativesarebeingimplemented ECDC’s humancapitalandcontributetobuildinganenablingenvironmentfor operating environment. The teamisworkingtoimprove theoverall qualityof The human capital teamhas aligned its focus in linewiththerealities of ECDC’s HUMAN RESOURCESDEVELOPMENT which positivelyimpactedonECDC’s strategy onyouthdevelopment. business advisors. Inthereviewperiod, therewasanintakeof34interns, project managementandmonitoringevaluation, aswelltheupskillingof development, propertyinvestment, facilitiesmanagement, duediligence, corporation. ECDCpridesitself on staffdevelopment in suchareas as property up itsHRdevelopmenttoaddressthecriticalskillsgapidentifiedwithin vs R527559forthe2014/15financialyear. ECDChastakenadecisiontostep The amountspentontraining inthe 2015/16financialyearwasR1446060 FOCUS AREAS FUTURE • •

challenge. and rewardsgoodperformance Embedding aperformancemanagement culturewhichalsorecognises Skills shortagesinthemarketandattr HR audit. Implementation oftheHRstandardsintermsSABPP Internship progr Leadership developmentprogr Embedding ofperformancemanagement New organisationalstructureimplementation F Male GENDER TRAINING PER emale

ammes 64% 36% amme , remainsa challenge. 71+13+8 acting therightskillsremaina Semi skilled T Skilled supervision Senior management LEVEL TRAINING PER op management

, includingan

13% 71% 8% 8%

23+31+4+834 34 R1 446060 Corporate services DEPARTMENT TRAINING PER Legal services Oper Finance CEO’ SPENTON TRAINING INTAKE OF INTERNS s office ations

23% 31% 34% 8% 4% 65

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 66 07 REPORT PERFORMANCE 67

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 68 59 KEY PERFORMANCE Co-operatives Fund 17 co-opsapprovedforImvaba 260 SMME % DEVELOPMENT SUPPORTPROGRAMMES HIGHLIGHTS DEVELOPMENT FINANCE 3JOBS 728 LOCAL &FOREIGNDIRECTINVESTMENT LOANS DISBURSED TARGET EXCEEDED BY223% SECURED INKEYECONOMY SECTORS ENTERPRISES WOMEN-OWNED CREATEDFINANCE AND THROUGH R2.2bn R92m S FINANCED through ECJobsStimulusFund 10 enterprisesreceivedR5million 2015/16 119 % ENTERPRISES YOUTH-OWNED 143 ENTERPRISESSUPPORTED creative industriesprogramme 112 enterprisesparticipatein R5.1 millioninresidentialsales 464 peopletrainedincriticalskillspartnershipwiththedti GOVERNANCE &FINANCIALMANAGEMENT WOMEN-OWNED 146 (50%) export promotion SECURED THROUGHTHIRD-PARTYFUNDING INNOVATION &DEVELOPMENT PROJECTS RENTAL COLLECTIONSROSE TO 99 (60%) ARESMME 99 (60%) BUSINESS SUPPORT 260 SMME R19.5m Unqualified auditoutcome PROPERTY R69.5m incubation programmes 39 enterprisessupportedthroughtwo at anadvancedstage Sales for15housesR3.9million YOUTH-OWNED 93 (32%) S

S 69

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 70 PREDETERMINED OBJECTIVES PERFORMANCE AGAINST • • 10% variance). This representsa75%achievement. From this, itcanbededucedthat: Of the12keyperformanceindicatorsetforgoal, seventargetswereachievedandtwoalmost(within COMMENTS ONGOAL 1 GOAL 1:STIMULATE ECONOMIC ACTIVITY approved bytheshareholder. tables, istherevisedECDC’s performanceagainstplannedtargets, as year andapprovedbytheshareholder. The following, asdetailedinthe ECDC set itself predetermined objectives, which were reviewedat mid- development finance SMMEs received Number of 1.1.2 KEYPERFORMANCE AREA: SMMEDEVELOPMENTFINANCE SUPPORT disbursed Rand valueofloans 1.1.1 KEYPERFORMANCE AREA: SMMEDEVELOPMENTFINANCESUPPORT indicator Key performance in linewithgovernmentimperatives Strategic Objective1.1:Optimiseinvestmentinprioritysectorsoftheprovincial economy •

which hadaknock-oneffectonthetargetssetbyECDC. recorded inthecorporate plan. Closer managementofserviceprovidersisalsoneeded, Greater alignmentmustoccurbetweenthirdpartiesandECDC risky andcostly. support. This target isstilllowconsideringthedemand; however, themarketthatcorporation isattracting isvery having taken steps to ensure that it maintains a quality loan book through its due diligence and SMME non-financial On theSMMEdevelopmentfinancesupport, 200 -5% R92312978 R97 000 Annual planned target 260 performance Actual thecorporation almostachieveditstarget. ECDCcanprideitselfon Deviation especially when entrusted to deliver key aspects of projects especiallywhenentrustedtodeliverkeyaspectsofprojects 30% (%) , especiallyintheareasofriskfundingandincubation, the beginningofnewfinancialyear. clients. These loanswill, however, befinalisedat delay insigningofcessionsbyemployersand 2016 couldnotbedisbursedprincipallydueto R8.9 millionapprovedduringFebruary andMarch New Significant portionoftargetachieved. have beendisbursedthisyear. Larger numberofsmallerloans thananticipated Target achieved. Nexus andWorkflow loanstothevalueof Comment/reason fordeviation

services financial support assisted withnon- Number ofSMMEs 1.1.3 SMMENON-FINANCIALSUPPORT indicator Key performance finance supported with co-operatives Number of 1.1.4 IMVABA CO-OPERATIVES realised investments Rand valueof 1.1.6 LOCAL&FOREIGNDIRECTINVESTMENTS programme the incubation entrepreneurs in Number of 1.1.5 INCUBATION PROGRAMME(ECITI)(DEDEAT APP KPI2.10) facilitated investments Number of 1.1.8 RISKCAPITAL (DEDEAT APP KPI2.7) sharing leveraged forrisk third-party funding Rand valueof 1.1.7 THIRD-PARTYFUNDING support integrated export provided with Local entrepreneurs Number ofSMMEs/ 1.1.9 INTEGRATED EXPORTSUPPORT(DEDEAT APP KPI2.8) strategic initiative) development and trained (sector Number ofpeople 1.1.10 CRITICALSKILLS TRAINING 280 16 70mlinR 6 6 4 223% R2262863845 R700 million 50 7 8 0 0 1 5 2 -77% R19857425 R85 000 50 400 Annual planned target 292 17 39 8 143 464 performance Actual Deviation 186% -22% 14% 16% (%) 4% 6% Comment/reason fordeviation led tooverachievement. products, especiallyinthecreativeindustryspace, chamber andhigherdemandformarketaccess Partnerships withotherpublicentities, business Target achieved. insufficient resources. number for its incubation programme due to Abenzi Woodhouse didnotachievethetarget Target notachieved. adjudication andapprovalofbacklogapplications. Target achievedduetocapacitatingofunit, • • Target notachieved. until now. for connectiontothegriddelayedinvestment regulatory processesandrelatedinfrastructure This amountedtoR2billion. The combinationof were inGrahamstown, Komga andPortElizabeth. projects startedaboutsevenyearsago. These Target achievedduetomaturityofwindfarm Technology Innovation Agency (TIA). received fundingthroughthepartnershipwith Target achievedduetoanadditionalproject Club andchambersofbusinessinbothareas. a factor is the collaboration between theExporters operational inPort Elizabeth and East London. Also Target achievedduetotheexporthelpdesksbeing additional numberbeingtrained. the Departmentof Trade andIndustryledtothe Target achieved due toacollaboration between

Schools Bio-Digesterswasdelayed. and TourismEnvironmental Affairs Development, through theDepartmentofEconomic plant inthe Western Cape. being intheEasternCapeandprocessing process and iscomplicatedduetothefarm delayed Karoo CatchinvestmentofR60millionwas R30 millionexpectedfromNational by IDC because of the due diligence Treasury

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 72 Plan Revitalisation Project Mdantsane Mall REVITALISATION1.1.12 TOWNSHIP promotion and investment finance, riskcapital development facilitated by Number ofjobs 1.1.11 JOBSFACILITATION indicator Key performance project plan Costed Approved 3728 4 000 Annual planned target planned. appointed as PSP hasbeen quarters. The per theprevious was doneas 50% ofthework performance Actual Deviation -50% -7% (%) • provider. There weredelaysintheappointmentofservice Target notachieved. • • Significant portionoftargetachieved.

these didnotmaterialiseontime. hub projects(Ncorha&Mqanduli). However, Forestry JobsFundproject, andpossibleRED from theMonyetla Work Readinessprogramme, In investmentpromotion, In riskcapital, Jobs Fund. Delays farm, whichdidnotmaterialiseontime. Indwe plantdelayed)andGraaff Reinetfish Alexandria), quarrymining(licensing of the from biofuel crops plantations (Ncgobo and in approvals and disbursements against Comment/reason fordeviation mostjobswereexpected jobswereexpected system implementation ofERP Acquisition and 2.3.2 INTEGRATED ENTERPRISERESOURCE PLANNING(ERP)SYSTEM performance contracts and reviewed employees contracted Percentage of 2.3.1 EMBEDDEDCULTURE OF THE PERFORMANCEMANAGEMENT SYSTEM 0% Annualplanned Key performanceindicator Strategic Objective2.3:Ensure fullimplementationofefficientorganisational resources andsystems Unqualified Unqualified Audit outcome 2.2.1 FINANCIALGOVERNANCE AND MANAGEMENT indicator Key performance Strategic Objective2.2:Attaincleanaudit income collected Rand valueofrental 2.1.3 RENTAL INCOME disposed properties Rand valueof 2.1.2 PROPERTYDISPOSAL impairment) ratio (excluding Cost-to-income 2.1.1 COSTOPTIMISATION indicator Key performance net leasesandmaximisationofreturnsonthevacantland. The corporation’s strategy fortheyear2016/17onwardsistoimproverentalincomethroughintroductionoftriple deduced thattheslowpaceondisposalofpropertiesisduetoanumberfactors, includingtheeconomictrends. (within 10%variance)andonetargetwasnotachieved. This representsan83%achievement. From this, itcan be Of thesixkeyperformanceindicatorssetforgoal, fourtargetswereachieved, onetargetwassignificantlyachieved COMMENTS ONGOAL 2 RETURNS AND ATTAININVESTMENT SUSTAINABILITY GOAL 2:OPTIMISE ALL RESOURCES TO MAXIMISE Strategic Objective2.1:Attainfinancialsustainabilitybyexceedingcosts 7 ilo 6 4 9 -3% R69549495 R72 million -91% R6843650 R78 million 1.09:1 1.08:1 Annual planned Annual planned procured partner implementation ERP vendorand 100% target target target performance procured partner implementation ERP vendorand 100% complete. 99.95% performance performance Actual Actual Actual Deviation Deviation Deviation (%) 1% (%) 0.5% (%) 0% Target achievedthroughunqualifiedauditoutcome. This ismainlyattributedtotenantapathy. Significant portionoftargetachieved. Target notachieved. Target achievedduetocostcontainment. • R13millionkeptinattorneys’trust accounts Current tenantsdisputingvaluationsduetoown • • Outstandingsubdivisions • Unanticipateddelaysduetopurchasersfailing Target achieved. Target achieved. conveyancing. waiting processingpendingconclusionof maintenance andrefusingtofinalisedeedsofsale secure finance(currenttenants) Comment/reason fordeviation Comment/reason fordeviation Comment/reason fordeviation 73

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 74 08 GOVERNANCE CORPORATE 75

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 76 Chairperson NHLANGANISO DLADLA AND APPROVAL STATEMENT OFRESPONSIBILITIES misstatement orloss. however, provideonlyreasonable, andnotabsolute, assurance againstmaterial preparation ofannualfinancialstatements. Anysystemofinternalcontrolcan, reasonable assurance thatthefinancial recordsmayberelieduponforthe The directorsareoftheopinionthatsysteminternalcontrolprovides predetermined proceduresandconstraints. infrastructures, controls, systemsandethicalbehaviourareappliedwithin corporation howeverendeavours to minimiseitbyensuringthatappropriate While itisacknowledgedthatoperating riskcannotbefullyeliminated, the managing andmonitoringallknownformsofriskacrossthecorporation. The risk management focus in the corporation is on identifying, assessing, conducted inamannerthatisabovereproachallreasonablecircumstances. to maintainhighethicalstandardsinensuringthecorporation’s business is reasonably possiblethroughoutthecorporation, andallemployeesarerequired During theyearunderreview, suchcontrolsweremonitoredasfar an acceptablelevelofrisk. effective accounting procedures and adequate segregation of duties to ensure include properdelegationofresponsibilitieswithinaclearlydefinedframework, at reducing the risk of error or loss in a cost-effective manner. These standards environment. To thisend, the directorssetstandardsforinternalcontrolaimed The directorsplaceconsiderable importanceonmaintainingastrongcontrol supported byreasonableandprudentjudgmentsestimates. and arebaseduponappropriateaccountingpoliciesconsistentlyapplied with South African StatementsofGenerally Accepted Accounting Practice The annualfinancialstatementsofthecorporation arepreparedinaccordance the annualfinancialstatements. The externalauditorsareengagedtoexpressanindependentopinionon Chief ExecutiveOfficer NDZONDELELO DLULANE

Chief Financial Officer SANDILE SENTWA financial assurance thatthe reasonable control provides of internal that of theopinion The directorsare statements. of for thepreparation may

annual

the be

relied system

records

financial

upon

CORPORATE GOVERNANCE is submittedtotheCompanySecretary. beginning ofthefinancialyearorasandwhenareviseddeclaration ofinterest The annualdeclaration ofinterestsregisterfortheboardisnotedat on anannualbasispriortothecommencementoffinancialyear. The corporation requiresallemployees tosigndeclaration ofinterestforms matter istrivialorirrelevant. the boardoranyofitscommitteesdeterminesthatamember’s interestinthe when thematterisconsideredbyboardoranyofitscommittees, unless or privatebusinessinterest, he/shemustwithdraw fromtheproceedings In instanceswhereanon-executivedirectorhasanydirectorindirectpersonal relations. which guidesemployeebehaviourinallinternalandexternalstakeholder The corporation valuesareentrenched throughanapprovedcodeofethics, CONFLICTS OF INTEREST governance prescriptsandguidelines. as containedintheKingReportsonCorporate Governanceandothergood applied bythecorporation. These areinlinewithbestpractice guidelines which consolidates the corporate governance procedures, practices and rules The boardcontinuedtoimplementthecorporate governanceframework, FRAMEWORK CORPORATE GOVERNANCE redress andethics. on principlesofservicedelivery, trust, integrity, transparency, accessibility, managed inanethicalanddisciplinedmanner. ECDC’s philosophyisfounded customers andstakeholders with the comfort that ECDC’s affairs are being in therunningofitsaffairs. This commitmentprovidestheshareholder(s), ECDC iscommittedtogoodcorporate citizenshipandorganisationalintegrity principles setoutinthePublicFinanceManagement Act (thePFMA). reports. The corporation furthersubscribestothecorporate governance to complyinallmaterialrespectswiththeprinciplesincorporated inthese in theKingReportsonCorporate Governance, andaffirmsitscommitment ECDC endorsesthecodeofcorporate practices andconductascontained INTRODUCTION • • • • The CompanySecretaryisresponsiblefor: COMPANY SECRETARIAL FUNCTION

Maintaining statutoryrecordsin accordancewithlegalrequirements K discharged inthebestinterests oftheorganisation Guiding boardmembersonhowtheirresponsibilitiesshould beproperly board arecompliedwith that applicablerulesandregulationsfortheconductof affairs ofthe Ensuring thatboardproceduresarefollowedandreviewed regularly and developments regardingcorporate governancethinkingandpractice eeping abreastof, andinforming, theboardofcurrentandnew . af running ofits integrity organisational citizenship and good corporate committed to ECDC is fairs.

the

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 78 Public Sector. Finance Management Act, includingProtocolonCorporate Governanceinthe the recommendationsofKing IIIandtherequirementsofECDCPublic board. These mandatesareperiodicallyreviewed andupdatedtoaddress acts withintheambitofclearly definedtermsofreferenceapprovedbythe accordance withtheapproved delegationofauthority. Each committee The board has delegated some of its responsibilities to committees in ATTENDANCE MEETING MEMBERSHIP AND COMMITTEES’BOARD AND matters areconcerned. representative onthecorporation’s needsandrequirementsasfarboard The Chairpersonisinconstantengagementwiththe shareholder SUCCESSION PLANNING matters andregulatorydevelopments. Non-executive directorsareregularlykeptabreastofrelevantcorporation duties ascontainedinthePublicFinanceManagement Act (PFMA)andECDC. environment, governanceframework, sustainabilityissuesandfiduciary the corporation’s businessenvironment, riskmanagement, regulatory A formalinductionprogramme introducesnon-executivedirectorsto of newnon-executivedirectorsanddirectors’orientation. The CompanySecretaryistaskedwithassistingtheboardinduction INFORMATION AND INDUCTION BOARD The ChairmanandtheChiefExecutive’s rolesandresponsibilitiesareseparate. as executivedirectors(exofficiomembers). the Chairman, aswelltheChiefExecutiveOfficerandFinancial board iscomprisedof11directors, ofwhomninearenon-executive, including be lessthanfiveandnotmore18directors. Asat31March2016, the The corporation’s memorandum of incorporation provides that there shall not Corporation Act, 1997(ActNo. 2of1997). Board of Directors in terms of section 7(3) of theEasternCapeDevelopment Economic Development, Environmental Affairs and Tourism, appointsthe The MemberoftheExecutiveCouncilresponsibleforDepartment BOARD COMPOSITION for theposition. the applicablelegislationandisconsideredbyboardtobefitproper The CompanySecretaryisqualifiedtoperformthedutiesinaccordancewith and thecorporation. Company Secretaryactsastheprimarypointofcontactbetweenboard advising theboard, throughtheChairman, onallgovernancematters. The The boardhasempoweredtheCompanySecretarywithresponsibilityfor responsibilities andpowers, andtheimpactofregulatorydevelopments. individual non-executivedirectorsandtheboardwithguidanceonduties, In additiontovariousstatutoryfunctions, theCompanySecretaryprovides The boardhasaccesstotheservicesandadviceofCompanySecretary. 11 BOARD MEMBERS M Damane M Sishuba S Thobela P Bosman N Madiba R Nicholls* M Maqetuka * External Audit Committeemember improvement andsoundgovernance. operate appropriately and assist the corporation with comprehensive control requirements andbusinessimperatives. These committeescontinueto Appropriate committeestructureshavebeenestablishedinlinewithlegislative • • • • • responsibilities, namely: The boardhasfivecommitteestoassistitindischargingitsroleand B Nqadolo L Jiya(DeputyChairperson) N Dladla(Chairperson) Non–executive directors qdl 31/091 03/11/2009 B Nqadolo Non-executive directors **External Audit Committeemember MEETING ATTENDANCECOMMITTEE BOARD AND L Jiya aeua0/121 7 08/11/2012 M Maqetuka lda0/021 6 - 01/10/2014 03/11/2009 N Dladla R Nicholls** S Thobela ihb 11/044 01/10/2014 M Sishuba aia1/921 7 15/09/2014 N Madiba omn0/021 7 01/10/2014 P Bosman aae1/921 7 15/09/2014 M Damane

Governance andNominationsCommittee Social andEthicsCommittee Funding andInvestmentCommittee Human ResourcesandRemuner Audit, RiskandComplianceCommittee 91/017 19/10/2011 50/047 15/09/2014 appointment Board Audit, Risk& Compliance 7 meetings Board: X X X X X ation Committee Audit, Risk& Compliance: 8 meetings . Remuneration 6 5 2 8 8 - - - - - HR & X X X X X Remuneration: 10 meetings HR & 10 10 6 9 5 - - - - - Funding & Investment Investment: Funding & X X X X X 6 meetings 3 6 6 4 5 - - - - - 3 meetings Social & Ethics: Social & Ethics 3 3 1 3 ------X X X X Governance & Nomination: 3 meetings 8 3 34 3 17 2 32 2 1 - 13 - 17 - 19 - 4 - 18 - Governance & Nomination X X X meetings Ad hoc 79

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 80 • • • • • • • • • • • • BOARD DECISION MATTERS RESERVED FOR corporation. The delegationofauthorityframework appliestoallemployeesofthe of thebusinesswithinapproveddelegationauthorityframework. The boardhasdelegatedtotheChiefExecutiveOfficerday-to-dayrunning DELEGATIONOF AUTHORITY •

incorporation totheshareholder material changesinstrategic direction and Remuneration Committee. Any shareholder the HumanResourcesandRemuner Effecting anychangesindirectors’feesandbenefitsasrecommendedby as theboardmayelectfromtimeto Appointments andchangesinthecompositionofboardcommittees respect ofthecorporation totheshareholder Recommending Approving Appointing andremovingtheCompanySecretary Entering intoacompactwiththeshareholder Recommending amendments shareholder’ Recommending theacquisitionordisposalofasignificantassetfor the corpor Recommending theacquisitionordisposalofasignificantshareholdingin Approving anysignificantchangesinaccountingpoliciesorpr dividends Approving annualfinancialstatements Approving thestr or convertiblesecuritiesissuedforacquisitions officers, capitalissuesorofconvertiblesecurities, includingshares amendment to such rules as recommended by the Human Resources ation fortheshareholder’s approval terms and conditions of the corporation’s rights issues, public s approval the approval of any ordinary or special resolutions in ategy, corporate plan, annualbudgetsandanysubsequent to thecorporation’s memorandum of ation Committeeandapprovedbythe , aswellthedeclaration of actices , √ R Nicholls B Nqadolo M Sishuba N Madiba P Bosman aeo ebrPro fMmesi 80/51/81 41/516/02/16 14/10/15 13/08/15 X 18/05/15 PeriodofMembership Name ofMember COMMITTEE REPORT AUDIT, RISK AND COMPLIANCE matter asoutlinedinthe Auditor-General’s report. 31 March2016thatreflectsanunqualifiedauditopinionwithemphasisof We arepleasedtopresentourreportforthefinancialyearended OVERVIEW with theapplicablelegalrequirementsandaccountingstandards. preparation ofaccurate reportingandfinancialstatementsincompliance operation ofadequatesystems, controlandreportingprocesses, andthe board indischargingitsdutiesrelatingtothesafeguardingofassets, the The purpose of the Audit, Risk and Compliance Committee is to assist the PURPOSE to thebusiness. charter whichisinformedbytherelevantgovernanceprescriptandaligned The Audit, Riskand Compliance Committee’s function isguidedbyadetailed responsibilities containedtherein. its affairs in compliance with these terms of reference; and has discharged its Risk andComplianceCommittee: hasformaltermsofreference; hasregulated internal auditing, internalcontrolandfinancialreportingpractices. The Audit, has dischargeditsresponsibilities astheyrelatetothegroup’s accounting, The Audit, RiskandComplianceCommitteeisacommittee oftheboardand RESPONSIBILITIES ROLES AND COMMITTEE’S AUDIT, RISK AND COMPLIANCE least four times a year. During the year under review, four meetings were held.. hereunder. As peritstermsofreference, thecommitteeisrequiredtomeetat The Audit, RiskandComplianceCommitteeconsistsofthememberslisted COMMITTEE MEMBERS& ATTENDANCE AUDIT, RISK&COMPLIANCE Present Absent withapology 10/04-3/321 √ 01/04/2014 -31/03/2016 10/04-3/321 √ √ 01/04/2014 -31/03/2016 01/10/2014 -31/03/2016 11/04-3/321 √ 01/10/2014 -31/03/2016 11/04-3/321 √ 01/10/2014 -31/03/2016 X X √ √ √

Corporation. Cape Development year 2015/16 respect ofthe Committee in Compliance Audit, Riskand provided This reportis

of X √ √ √ √

Eastern

financial

the √ √ √ x x

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 82 • Compliance Committee, insofarasrelevanttoitsfunctions: In respectofriskmanagement andinformationtechnology, the Audit, Riskand INFORMATION TECHNOLOGY MANAGEMENT AND RISK with itslegal, regulatoryorotherresponsibilities. not implemented. Notwithstanding this, there has been substantial compliance previous financialyearstobuildcapacityintheareaoflegal and compliancewere The Audit, Riskand ComplianceCommitteenotesthatitsrecommendationsof responsibilities. of thecorporation’s procedurestoensurecompliancewithlegalandregulatory reviewed thecorporation’s internallegalteamandtheadequacyeffectiveness impact on the financial statements, the Audit, Risk andCompliance Committee In respect of legal and regulatory requirements to the extent that it may have an COMPLIANCE LEGAL AND of Internal Audit, andtheinternalauditfunction. Committee isalsoresponsiblefortheassessmentofperformanceHead Committee Chairpersonandothermembers. The Audit, RiskandCompliance The HeadofInternal Audit hasdirectaccess tothe Audit, RiskandCompliance financial risksfacingthebusiness. internal auditorsandconcludedthatthesewereadequatetoaddressallsignificant Compliance Committeereviewedtheplansandworkoutputsofexternal In respectofthe coordination ofassurance activities, the Audit, Riskand • • audit functionandhasconcludedthefollowing: The Audit, RiskandComplianceCommitteereviewedtheactivitiesofinternal INTERNAL AUDIT and standards. during theyearunderreviewhasbeenproducedinlinewithspecifiedguidelines quality of monthly and quarterly reports prepared and issued by the corporation The Audit, RiskandComplianceCommitteeisoftheviewthatcontent PERFORMANCE INFORMATION MONTHLYQUARTERLY AND throughout theyearunderreview. the opinionthatinternalcontrolsofcorporation werepartiallyeffective such reviewsandtheinformationprovidedbymanagement, thecommitteeisof Risk andComplianceCommitteehasnotedthesebasedontheoutcomeof General, indicatedthatthesystemofinternalcontrolhasshortcomings. The Audit, on the Annual FinancialStatementsandManagementReportofthe Auditor- During theyear, variousreportsoftheinternalauditor, aswellthe Audit Report EFFECTIVENESS OF INTERNAL CONTROL

therein. of significantinvestigationsandtheresponsesmanagementtoissues raised annual work programme, coordination withthe external auditors, the reports The internalauditreportswerereviewedatquarterlymeetings limitations The functioniseffectiveandthattherewerenounjustifiedrestrictionsor and foundthem tobeadequate risks astheypertaintofinancial reportingandthegoingconcernassessment, Reviewed thepoliciesonrisk assessment andriskmanagement, , includingits includingIT Chairperson ofthe Audit, RiskandComplianceCommittee P BOSMAN in preparingtheannualfinancialstatements. Committee agreesthattheadoptionofgoingconcernpremiseisappropriate of the Auditor-General andtheDirectors’Report. The Audit, Riskand Compliance the auditedfinancialstatementsbe acceptedandreadtogetherwiththereport General ontheannualfinancialstatements. Thecommitteeisoftheopinionthat The • • • The Audit, RiskandComplianceCommitteehas: EVALUATION OF FINANCIAL STATEMENTS audit process. plan toensurethatkeyriskareasofthebusinesswerebeingaddressedduring Risk andComplianceCommitteereviewedtheexternalauditors’scopework The Auditor-General acted as the external auditors throughout the year. The Audit, EXTERNAL AUDITORS maturity model. Internal Audit hasassessedtheriskmanagementprocessesatalevel3of assessment andhavefoundthesystemofinternalcontrolstobepartiallyeffective. Internal Audit hasperformedareviewon riskmanagementfortheyearunder • •

Reviewed thesignificantadjustmentsresultingfromaudit. management responsesthereto Reviewed the the auditedannualfinancialstatementstobeincludedinreport Reviewed anddiscussedwiththe governance andthemanagementofIT. Monitored andevaluatedsignificantITinvestments audit Considered andreviewedthefindingsrecommendationsofinternal Audit, RiskandComplianceCommitteenotes the conclusions of the Auditor- Auditor-General’s auditreport, themanagementletterand Auditor-General andtheaccountingauthority , deliveryofservices, IT 83

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 84 DIRECTORS’ REPORT ACCOUNTING POLICIES the newfinancialyear. finance departmentandwillembarkonaddressingsuchduringthecourseof The Audit, Risk and Compliance Committee notes some shortcomings in the Function. assessed thecompetencyofChiefFinancialOfficerandFinance In accordance with King III, the Audit, Risk and Compliance Committee has FINANCIAL OFFICER COMPETENCY OF THE CHIEF with summarycurriculavitaeofeachdirectorcontainedonpages12-13. The compositionoftheboardissetoutinCorporate Governancereport DIRECTORS Economic Development, Environmental Affairs and Tourism. represented bytheMemberofExecutiveCouncilDepartment The Provincial Government of the Eastern Cape is thesole shareholder SHAREHOLDING Provincial GovernmentBusinessEnterprise. Public FinanceManagement Act, 1999 (Act No. 1 of 1999) (the PFMA) as a Act, 1997(ActNo. 2of1997)(ECDC Act). ItislistedinSchedule3Dofthe The corporation isestablishedbytheEasternCapeDevelopmentCorporation statements aredisclosedintheaccountingpolicies. application of IFRIS that have a significant impact on the annual financial Judgements madebymanagementandsupportedthe boardinthe POLICIES THE ACCOUNTING ESTIMATIONS MADEIN APPLYING JUDGEMENTS AND CRITICAL applied intheprioryear. International FinancialReportingStandards(IFRIS)andconsistentwiththose statements fortheyearended31March2016areinaccordancewith The accountingpoliciesusedinthepreparation oftheannualfinancial 31 March2016. year statements forthe audited their reportandthe pleased topresent The directorsare

ended

financial

consistent withitsobjectivesand strategic valuedrivers. such, the Eastern CapeDevelopmentCorporation’s approachtorewardis behaviour andultimatelythe financial sustainabilityofthecorporation. As a directimpactonoperational expenditure, organisationalculture, employee remuneration isabusinessissue, notpurelyahumanresources issue, asithas the right time to support delivery of business objectives. ECDC recognises that HR strategy remainsfocusedonprovidingtherightskillsinplaceat ECDC strategy andprovidestheframework foraddressingHRchallenges. The business. The humanresourcesstrategy remainsoneofthepillars ECDC continuestoregarditsemployeesasthemostvalued assetofthe EXECUTIVE REMUNERATION continue itsoperational existenceforthefuture. are satisfiedthatthecorporation has, orhasaccessto, adequateresourcesto 2016 and, inthelightofthisreviewandcurrentfinancialposition, thedirectors Having reviewedthecorporation’s cashflowforecastfortheyearto31March GOING CONCERN There arenopostbalancesheeteventsrelatingtotheyearunderreview. EVENTS REVIEW POST BALANCESHEET been disclosedinnote28oftheannualfinancialstatements. the corporation andthegroup. The contingentliabilitiesofthegrouphave certainty. These estimatestakeintoaccountthelegalopinionsobtainedfor defendant orplaintiff, wheretheoutcomecanbeassessedwithreasonable settlement costs for judicial proceedings entered into by ECDC, as either The annualfinancialstatementsincludeabestestimateofexpected JUDICIAL PROCEEDINGS No dividendsweredeclaredorpaidtoshareholdersduringtheyear. DIVIDENDS supplementary informationtotheannualfinancialstatements. A detailedlistofsubsidiariesandassociatecompaniesarecontainedinthe ASSOCIATE COMPANIES AND SUBSIDIARIES DIVISIONS, 213 794837 “B” sharesofR1each. The issuedsharecapitalismadeupof213794837 “A” sharesofR1eachand and Tourism). Eastern Cape(DepartmentofEconomicDevelopment, Environmental Affairs 427 589674worthofordinarysharestotheProvincialGovernment R1 billionworthofordinaryshares. Ofthis, thecorporation issued The authorisedsharecapitalofthecorporation remainedunchangedat CAPITAL AUTHORISED AND ISSUEDSHARE

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 86 attendance duringthefinancialyearunderreview. Fees werepaidtodirectors fortheboard, sub-committee and adhoc DIRECTOR’S FEES impact ontheincreasesofexecutives. the remuneration ofexecutivesat state-ownedcompanieswill, infuture, also The outcomeofthecurrentstudybyPresidentialReviewCommitteeinto survey publishedannuallybyDeloitteConsulting. SA GuidetoExecutiveRemuneration andReward, anationalremuneration The executiveremuneration benchmark surveyisconductedbasedon The compare theremuneration ofthe executive teamswiththeexternalmarket. ECDC annuallyconductsanexecutiveremuneration benchmarkexerciseto The aimistopayfairlyforresponsibilityexercisedandresultsachieved. remuneration ofexecutivesatECDC compareswellwiththemarketmedian. ECDC aimstoremunerate employeesatthemarketmedianandguaranteed of managingkeynationalresources. or largerthan, publiclistedcompanies. They alsohavetheaddedresponsibility State-owned companiesoftenmanagebusinessesofthesamemagnitudeas, with exceptionalskillstoleadthemcompetentlyandcreateemployment. market. Itisgenerally acceptedthatstate-ownedenterprisesrequirepeople The remuneration levelsoftheECDCexecutivesarelargelydeterminedby GUARANTEED EXECUTIVE REMUNERATION – • • Accordingly theobjectiveofECDCremuneration philosophyisto: • • • lda63187.00 N Dladla ia61100.00 L Jiya aeua45825.00 M Maqetuka aae45825.00 M Damane aia4 2.0 0500 1 7.0 76237.50 17775.00 40550.00 45825.00 N Madiba S Thobela ihb 0850 1 7.0 7.0 25550.00 5275.00 10 275.00 30825.00 M Sishuba omn4 2.0 81100.00 45825.00 P Bosman R Nicholls B Nqadolo

Commensur Attr Establish rewardasa calibre staff Compete effectivelyinthelabourmarketandtorecruitretainhigh Increase productivitybyensuringthatindividuals retain acompetitiveedgeoveritscompetitors level promote continuous improvement both at a personal, corporate and unit total costofemployment and rewardedforsustainedsuperiorperformance, whilstmanagingthe act, motivateandretainskilledpersonnel toenablethecorporation to 384 237.50 169 837.50 58 737.50 228 987.50 124 212.50 58 462.50 58462.50 124212.50 228 987.50 58 737.50 169837.50 384 237.50 45 825.00 ate paytoperformance. Board - - Audit, Risk& strategic driverofperformance, to encourage and Compliance 37 912.50 - - - - - 5250 4 2.0 30825.00 45825.00 15275.00 - - Social & 0425 30550.00 20 412.50 Ethics - - - - Remuneration , teamsarerecognised 0850 25825.00 50 825.00 HR & - 6775 1 7.0 56287.50 15275.00 46737.50 - - - - Funding & Investment 0850 1 7.0 281912.50 10275.00 20 825.00 2925 266312.50 22912.50 ------Governance & Governance & Nominations 0000 37687.50 10 000.00 80737.50 - 123162.50 - 102462.50 - 128154.02 - 7912.50 - - 1 081 629.02 2 109 104.02 2109104.02 1 081629.02 Ad hoc - 352 412.50 179 400.00 177 525.00 245 837.50 282 850.00 265 904.02 119 612.50 439 937.50 45 825.00 TOTAL - 4. 3. AUDITOR-GENERAL’S RESPONSIBILITY 2. FINANCIAL STATEMENTS CONSOLIDATEDSEPARATE AND RESPONSIBILITYFOR THE AUTHORITY’S ACCOUNTING 1. INTRODUCTION 5. EASTERN CAPEDEVELOPMENTCORPORATION TO THE EASTERNCAPEPROVINCIALLEGISLATURE ON OF THEAUDITOR-GENERAL REPORT

are freefrommaterialmisstatement. assurance aboutwhethertheconsolidated andseparate financialstatements with ethicalrequirements, andplanperformtheaudittoobtainreasonable with InternationalStandardson Auditing. Those standardsrequirethatIcomply financial statementsbasedonmyaudit. Iconductedmyauditinaccordance free frommaterialmisstatement, whetherduetofraud orerror. enable thepreparation ofconsolidated andseparate financialstatementsthatare for suchinternalcontrolastheaccountingauthoritydeterminesisnecessaryto Finance Management Act ofSouth Africa, 1999(ActNo. 1of1999)(PFMA), and Accounting Practice (SA Statements ofGAAP)and the requirementsof the Public statements in accordance with South African Statements of Generally Accepted the preparation andfairpresentation oftheseconsolidatedandseparate financial The boardofdirectors provide abasisformyauditopinion. I believethattheaudit presentation oftheconsolidated andseparate financialstatements. accounting estimatesmadeby management, aswellevaluatingthe overall the appropriatenessofaccountingpoliciesusedandreasonableness of effectiveness oftheentity’s internalcontrol. An auditalsoincludes evaluating in the circumstances, but not for the purpose of expressing an opinion on the financial statementsinordertodesignauditproceduresthat areappropriate entity’s preparation andfairpresentationoftheconsolidatedseparate those riskassessments, theauditorconsidersinternalcontrolrelevantto and separate financialstatements, whetherdueto fraud orerror. Inmaking the assessmentofrisksmaterialmisstatement the consolidated The proceduresselecteddependontheauditor’s judgement, including amounts An auditinvolvesperformingprocedurestoobtainevidence aboutthe My responsibilityistoexpressanopinionontheseconsolidatedandsepar I haveauditedtheconsolidatedandsepar significant accountingpoliciesandotherexplanatoryinformation. flows fortheyearthenended, aswell thenotes, comprisingasummaryof comprehensive income, statementofchangesinequity, andstatementofcash position asat31March2016, theconsolidated andseparate statementof 95 to140, whichcomprisetheconsolidated andseparate statementoffinancial Eastern Cape Development Corporation and its subsidiaries set out on pages and disclosures in the consolidated and separate financial statements. , whichconstitutestheaccountingauthority, isresponsiblefor evidence I have obtained is sufficient andappropriate to ate financialstatementsofthe ate 87

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 88 13. REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS 12. OTHER REPORTSREQUIREDBY THE COMPANIES ACT aw attentiontothematterbelow. Myopinionisnotmodifiedinrespectof 11. ADDITIONAL MATTER 10. DISCONTINUED OPERATION 9. MATERIAL IMPAIRMENTS 8. IRREGULAR EXPENDITURE draw attention to the matters below. My opinion is not modified in respect of 7. EMPHASIS OF MATTERS 6. OPINION

I In myopinion, R37.04 million(2014-15: R35.26million). material impairmentsrelatingtotrade andotherreceivablesamountingto Included innote20totheconsolidatedandsepar these matters. SA StatementsofGAAPandtherequirementsPFMA. performance andcashflowsfortheyearthenended, inaccordancewiththe Corporation (ECDC)anditssubsidiariesasat31March2016theirfinancial in allmaterialrespects, thefinancialpositionofEasternCapeDevelopment or condonedisdisclosedinnote36tothefinancialstatements. accumulated fromtheprioryearandthathasnotbeenrecovered, writtenoff Irregular expenditureofR8.89million(2014-15: to identifyreportablefindings asdescribedundereachsubheadingbutnotto compliance withlegislationand internalcontrol. The objectiveofmytestswas objectives ofselected objectives presented in the annual performance report, findings onthereportedperformance informationagainstpredetermined and thegeneral noticeissuedintermsthereof, Ihavearesponsibilitytoreport In accordancewiththePublic note 42totheconsolidatedandseparate financialstatements. a result, isnot required to be consolidated inthecurrent year asdisclosedin Oceanwise (Pty)Ltdwasdiscontinuedwitheffectfrom31March2016and, them. have notauditedthereportsandaccordinglydoexpress anopinionon statements inrespectofwhichIhaveexpressedanunqualified opinion. I between the reports and the audited consolidated and separate financial Based onreadingthesereportsIhavenotidentifiedmaterial inconsistencies statements. These reportsaretheresponsibilityofrespective preparers. between thesereportsandtheauditedconsolidatedseparate financial for the purpose of identifying whether there are materialinconsistencies this matter. 31 March2016, As partofourauditthefinancialstatementsforyearended I dr theconsolidatedandseparate financialstatementspresentfairly, Ihavereadthedirector’s report, theauditcommittee’s report Audit Act ofSouth Africa, 2004(ActNo. 25of2004) ate financialstatementsare R8.08million)thathas as

23. EXPENDITURE MANAGEMENT 22. REPORTING CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS AND 21. LEGISLATIONCOMPLIANCE WITH 20. UNAUDITED SUPPLEMENTARY INFORMATION 19. ACHIEVEMENT OFPLANNED TARGETS 18. ADDITIONAL MATTERS 17. 15. 14. PREDETERMINED OBJECTIVES 16.

express anopinionorconclusiononthesematters. gather evidencetoexpressassurance onthesematters. Accordingly, Idonot financial statementsasrequired bysection51(1)(b)(ii)ofthePFMA. to R26,19millionasdisclosed innote36oftheconsolidatedandseparate the PAA, areasfollows: matters inkeylegislation, assetoutinthegeneral noticeissuedinterms of and otherrelatedmatters. Mymaterialfindingsoncompliancewithspecific not auditedtheseschedulesand, accordingly, Idonotreportonthem. annual performancereportandispresentedasadditionalinformation. The supplementaryinformationsetoutonpage73doesnotformpartofthe attention tothefollowingmatters: the reportedperformanceinformationforselectedstrategic goal, Idraw Although Ir I didnotr whether itwasvalid, accurate andcomplete. I assessedthereliabilityof whether I evaluatedtheusefulnessofreportedperformanceinformationtodetermine • Str ended 31March2016: goal presentedintheannualperformancereportofentityforyear of thereportedperformanceinformationfollowingselectedstr I performedprocedurestoobtainevidenceabouttheusefulnessandreliability Effective stepswerenottaken topreventirregularexpenditure with applicablelegislationregardingfinancialmatters I performedprocedurestoobtainevidencethattheentityhadcomplied reported performanceinformationfortheselectedstrategic goal. managing programme performanceinformation(FMPPI). bound andrelevant, asrequiredbythe National Treasury’s Framework for indicators and targets were well defined, verifiable, specific, measurable, time with theplannedobjectives. Ifurtherperformedteststodeterminewhether reporting principlesandwhetherthereportedperformancewasconsistent opinion. consolidated andseparate financialstatementsreceivingaunqualifiedaudit and the supporting records were provided subsequently, which resulted inthe consolidated andseparate financialstatementsweresubsequentlycorrected and discontinuedoperations identifiedbytheauditorsinsubmitted 55(1)(a) and(b)ofthePFMA. Materialmisstatementsofcurrent assets framework and supported by full and proper records as required by section were not prepared in accordance with the prescribed financial reporting The consolidatedandsepar the achievementofplannedtargetsforyear Refer totheannualperformancereportonpages7073forinformation ategic goal1: Stimulateeconomicactivity onpages70to72 it was presented in accordancewith the National Treasury’s annual aise anymaterialfindingsontheusefulnessandreliabilityof aised nomaterialfindingsontheusefulnessandreliabilityof the reportedperformance information todetermine ate financialstatementssubmittedforauditing . , financialmanagement , amounting Ihave ategic 89

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 90 29. GOVERNANCE 28. MANAGEMENT PERFORMANCE FINANCIAL AND 27. 26. LEADERSHIP 25. INTERNAL CONTROL 24. PROCUREMENT AND CONTRACT MANAGEMENT 31July2016 EAST LONDON

Recurring materialnon-compliancefindings monitoring oftheauditimprovementplan. management arenotbeingadequatelyaddressed. This isduetoinadequate expenditure management and non-compliance with procurement and contract misstatements intheconsolidatedandseparate financialstatements, Although The auditofonetheentity’ monitoring ofcompliancewithlawsandregulationsthroughouttheyear. on oversightandaccountabilitytoensureconsistentimplementation an improvedauditoutcome. Howeverthereisstillimprovementrequired Leadership’ regulation 18. Development Board(CIDB), Construction projectswerenotregisteredwiththeIndustry its subsidiaries. inadequate toensureproperfinancialmanagementandgovernanceofsome financial resultsofthissubsidiary. TheoversightoverECDC’s subsidiariesis adjustment wasmadetotheconsolidatedfinancialstatementsinclude of submittingconsolidatedfinancialstatementsforauditing. Amaterial results oftheriskassessmentprocess. adequately. This indicatesinadequateimplementationandmonitoringofthe the findingsoncompliancewithlawsandregulationswerenotaddressed necessary policiesandprocedureshavebeenformulateddocumented, I consideredinternalcontrol legislation includedinthisreport. internal controldeficienciesthatresultedinthefindingsoncompliancewith with legislation. The mattersreportedbelowarelimitedtothesignificant separate financialstatements, annualperformancereportandcompliance risk management activities took place within the entity and the s oversightresponsibilityoverfinancialreportingresultedin asrequiredbysection22oftheCIDB Act andCIDB relevant tomy audit oftheconsolidatedand s subsidiarieswasnotconcludedatthestage , particularly material 91

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 92 09 STATEMENTS FINANCIAL 93

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 94 Postal address Registered office Legal Form Country ofincorporationanddomicile NO A ST ST ST GENERAL concern basis, were approved bytheBoardofDirectorson29July2016andweresigneditsbehalfby: The consolidatedannualfinancialstatementssetoutonpages 95to140whichhavebeenpreparedonthegoing STATEMENT OFFINANCIALPOSITION FOR THE YEAR ENDED31MARCH2016 FINANCIAL STATEMENTS CONSOLIDATED ANNUAL EASTERN CAPEDEVELOPMENTCORPORATION to theshareholder: The reportsandstatementssetoutbelowcomprisetheconsolidatedannualfinancialpresented CCOUNTING POLICIES Chief Executive Officer NDZONDELELO DLULANE ATEMENT OFCASHFLOWS ATEMENT OFCHANGESINEQUITY ATEMENT OFCOMPREHENSIVEINCOME TES TO THE CONSOLIDATEDSTATEMENTSTES TO THE FINANCIAL ANNUAL

INFORMATION

Chief Financial Officer SANDILE SENTWA

PO Box11197, Ocean Government BusinessEnterprise South Africa Terrace Park, MooreStreet, Quigney, EastLondon Southernwood, EastLondon, 5213

109 98 97 95 94 93 Total EquityandLiabilities Total Liabilities Deferred income Trade andotherpayables Finance leaseobligation Operating leaseliability Loans fromshareholders Current Liabilities neetbaigbroig 14 Current taxpayable Interest bearingborrowings eieetbnftolgto 53 9 2392 0 5613238928808 35 691 808 38928 691 32 15 35 Deferred tax Deferred income Retirement benefitobligation neetbaigbroig 14 Finance leaseobligation 6 Interest bearingborrowings Loans fromshareholders Loans fromgroupcompanies Non-Current Liabilities LIABILITIES Operating leaseliability Non-controlling interest Retained income Reserves Share capital Holders ofParent Equity Attributable toEquity Equity LIABILITIES EQUITY AND o-urn seshl o ae43 Total Assets Non-current assetsheldforsale rd n te eevbe 03 5 5215 8 4002 6 19632 470407 279077 20 062 247000 34050 606705 55880 301274 25211 270735 38852 11 10 Cash andcashequivalents Loans advanced Trade andotherreceivables Inventories Current Assets Current taxreceivable Loans toincubatees Loans advanced rpry ln n qimn 0069 2 4 9 3812 6 24888 24 461 23821 543091 94428 Operating leaseasset 60006 Deferred tax 4 Investments Loans togroupcompanies Investments inassociates 3 Investments insubsidiaries Intangible assets Property, plantandequipment Investment property Biological assets Non-Current Assets ASSETS AS AT 31MARCH 2016 STATEMENT OFFINANCIALPOSITION Figures inRandthousand oes 0621 0421 052014 2015 2016 2014 2015 2016 Note(s) 77 0 12922757 7 559132133 231325 75549 101960 71470 127 438 373603 202735 110817 91299 139991 72402 16 17 44 41 16 44 41 340504799457940504050407403 427590 410540 427590 410540 427590 415709 427590 427949 427590 410540 427590 13 12 42 40 39 8 6808 1 8743 8 71268704 87112 36880 68704 87112 36880 9 7 5631 4 0464 6 48870476 14848 45663 70476 14848 45663 9 5223 9 4773 5 18732454 31857 31954 34727 21613 35394 23919 35252 730371 26798 874361 8 1 032 197 7 2051831 6 929461 5 1097747 2 2 0 4 5 7 4 0 7 8 7 1474576 1381274 1508976 3474049 1549358 1 624401 7 1 5 5 2 7 1 2 1 3 1038608 1116935 1215721 1320877 1259754 1 375013 2 0 4 5 7 4 0 7 8 7 1474576 1381274 1508976 3474049 1549358 1 624401 6 5 2 5 2 5 8 6 9 7 901738 990778 1182061 2726459 1128358 1 266656 7 9 6 2 7 2 1 2 1 3 1038608 1116935 1215721 1278226 1265420 1 373899 4 8 8 0 5 7 9 5 6 3 435968 264339 293255 2153172 289604 249 388 1 9 0 9 7 3 9 5 7 2 363731 178524 199651 576733 203893 213 292 4 6 1 5 3 9 1 3 8 5 558743 386251 317930 733495 416755 348 760 3 6 0 8 3 2 7 9 7 0 203615 278805 377591 434927 409881 535 769 6068 1 7 3 3648 1 72237 85815 93604 1576439 85 711 36 096 1 566 42651 (5 666) 1 114 8 4 40589542514095 4245 8985 14095 4245 8 985 3 7 2033 3073 2 033 3 5 458508 508 14 553 530 3 0 7 3 0 273 507 235 273 507 235 7 0 1546683 504 379 175 1 5 473 650 613 7 1 4 7 8158 98 475 3448 5418 577 8101 68 618108 108 66 580 15 15150 541 11 58 173 85 85 508 - 16 - 385898 23875 - - 28306 - - - - 24240 - Group - - 800 ------7935 2 42531 52720 57913 - - - 4992 4 20 385 22141 23 006 24939 23012 - 23012 ------9 898 198 - 508 ------Company ------95

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 96 Figures inRandthousand AS AT 31MARCH 2016 STATEMENT OFCOMPREHENSIVEINCOME Revenue Continuing operations Other income Government grants Operating expenses Operating loss Investment revenue Fair valueadjustments investments Income fromequityaccounted Finance costs Profit beforetaxation Taxation Profit fromcontinuingoperations Ls)poi rmdsotne prtos43 (Loss) profitfromdiscontinuedoperations Discontinued operations Profit fortheyear Gains andlossesonpropertyrevaluation Other comprehensiveincome: Total comprehensiveincomefortheyear operations Profit fortheyearfromcontinuing Owners oftheparent: Attributable to: discontinuing operations (Loss) profitfortheyearfrom owners oftheparent Profit fortheyearattributableto Profit fortheyearfromcontinuingoperations Non-controlling interest: Owners oftheparent attributable to: Total comprehensiveincome Non-controlling interest Gains andlossesonpropertyrevaluation Other comprehensiveincome: net oftaxation Other comprehensiveincome for theyear oes 2016 Note(s) 0(605 7 6)(374 (91651) (83754) (75463) (86015) 20 19 22 23 24 25 36 4462 4860 3336 (404578) (383326) (468640) (424 682) 0 6 0 8 87668796 98786 100782 104 568 0 8 9989 8 68796 98786 99958 104 584 3 5 3 4 2 1 117325 123918 131849 137 950 7 7 3 8 5 3 171763 150335 235681 175 270 7 3 6 3 7 7 149572 171773 164536 177 834 (53 696) 0 1 0 5 87668796 98786 100050 104 518 (53 696) 0889 5 87668796 98786 99958 50 888 08813059 8 71933 98786 103095 50 888 08210009 8 68796 98786 100050 50 822 08813059 8 71933 98786 103095 50 888 5472 4 53923839 25319 25647 25 447 0021 4 08010949 10890 10142 10 002 08213179 8 71933 98786 103187 50 822 2 880 (133) Group 16 66 66 - - - 2015 2 305 3 137 3 137 3 137 (738) (824) (92) (92) - - 2016 (123) Company ------2015 3 137 3 137 3 137 (74) ------reserves Transfer between income fortheyear Total comprehensive Profit fortheyear 2014 asrestated Balance at01 April (note 38) Prior yearadjustments Adjustments previously reported Opening balanceas GROUP Share FiguresinRandthousand AS AT 31MARCH 2016 STATEMENT OFCHANGESINEQUITY 2016 Balance at31March equity recognised directlyin owners ofcompany and distributionsto Total contributionsby discontinued operations Oceanwise - income fortheyear Total comprehensive (Loss) Fair valuegains/Profitor Profit fortheyear 2015 asrestated Balance at01 April Revaluation Reserve Correction ofPPE (refer toNote38) Prior yearadjustments Adjustments previously reported Opening balanceas equity recognised directlyin owners ofcompany and distributionsto Total contributionsby controlling interest Correction ofNon- recorded incorrectly Revaluation ofPPE reclassified investments Impairment on Oceanwise (Pty)Ltd Reserves takenoverat at Oceanwise(Pty)Ltd Retained losstakenover 2 9 1042 8 8 6 2 4 0 8 6 1 566 1258953 (5666) 1264619 409881 427148 384265 22680 21004 427 590 1320877 42651 1278226 434927 415709 392571 22680 458 427 590 2 9 9 260342540505579133891141375013 1114 1373899 535769 410540 384265 22680 3595 427 590 2 9 8682 8 8 6 2 1 1 7 7 7 566 1264708 (5666) 1270374 417972 424812 384265 22680 18668 427 590 1311969 42651 1269318 426019 415709 392571 22680 458 427 590 capital 3 3 3 2336 - 2336 - (8091) - 2336 - - - 3137 6395 - (16533) - - - 16533 16533 2336 - 3137 6395 17409 - - - - 6395 - (27482) - - 10000 17409 3137 (37482) - - - (37482) - 8908 99958 - (92) - - - 17409 - (160540) 100050 - - (41692) (118848) 8908 100050 - 3137 (110542) - - (8306) - - 8908 - (8306) - - - - - 17409 ------0825 2 650888 64371 66 6714 - 57657 50822 75066 - 50822 (17409) ------(17409) ------056-( 0)1 4 1506 1286 4 2)(161081) (48225) (112856) (125096) 12240 (8306) - 99958 20546 (92) - 100050 100050 - - - - - 0825 2 650888 66 50822 50822 ------Revaluation resereve (17 409) available for sale reserve adjustment Fair value assets - - Other NDR reserves 1 0)7 6 76767464371 6714 57 657 75066 (17 409) Total Retained income equity holders attributable to of thegroup/ company Total - - - controlling interest Non- (8091) - Total equity 97

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 98 equity recognised directlyin owners ofcompany and distributionsto Total contributionsby reclassified investments Impairment on income fortheyear Total comprehensive (Loss) transferred/Profit or Fair valuegains Profit fortheyear 2014 01 April Balance at COMPANY Share FiguresinRandthousand (refer toNote38) Prior yearadjustments Adjustments previously reported Opening balanceas Note(s) 31 March2016 Balance at income fortheyear Total comprehensive (Loss) transferred/Profit or Fair valuegains Profit fortheyear 2015 asrestated Balance at01 April ...CONTINUED STATEMENT OFCHANGESINEQUITY 2 9 5 26034254743236510868-1038608 - 1038608 203615 407403 384265 22680 458 427 590 2 9 9 26034254050375112571-1215721 - 1215721 377591 410540 384265 22680 1116935 3595 - 427 590 1116935 278805 410540 384265 22680 3595 427 590 2 9 5 26034254824381211396-1143906 - 1143906 308112 408204 384265 22680 1259 427 590 capital 21 636 13&36 12 - - (26971) - - 6395 - - (26971) - (29307) 2336 - - - 3137 6395 - - - 68796 - 6395 - - - 3137 2336 - 68796 - - 68796 - - 3137 ------3137 - - - 9 9 6395 - 6395 6395 - 71933 - - - 71933 68796 - 3137 - - - 3137 - 8769 8 98786 - 98786 98786 - - - - - Revaluation resereve available for sale reserve adjustment Fair value assets Other NDR reserves Total Retained income 8769 8 98786 - 98786 98 786 36 equity holders attributable to of thegroup/ company Total - - controlling interest Non- Total equity - Figures inRandthousand Interest income Cash from/(used)inoperations Cash flowsfromoperatingactivities Dividends received Finance costs Net cashfrom/(used)inoperatingactivities Tax paid ucaeo rpry ln n qimn 3 Sale ofinvestmentproperty Sale ofproperty, plantandequipment Purchase ofproperty, plantandequipment Cash flowsfrominvestingactivities Loans fromgroupcompaniesrepaid Sale ofnon-currentassetsheldforsale Purchase ofintangibleassets Loans advancedtogroupcompanies Purchase offinancialassets Loans disbursed Loans collected investing activities Net cash(from)/generatedfrom Repayment ofinterestbearingborrowings Cash flowsfromfinancingactivities Finance leasepayments Net cashflowsofdiscontinuedoperations Net cashfromfinancingactivities Total cashmovementfortheyear the year Cash andcashequivalentsatthebeginningof Decoupling ofOCEANWISE/ELIDZ of theyear Cash andcashequivalentsattheend AS AT 31MARCH 2016 STATEMENT OFCASHFLOWS oes 2016 Note(s) 1207531242700279 077 247000 301274 270735 11 6(385 2136 8 1)(250623) (87912) (231396) (73895) 26 27 40 40 2 3 6 2)(2 1)(919 (241446) (79119) (222116) (64 027) (13 762) 9 7)(649 9 7)(96419) (90079) (96419) (90 079) 3 0 1 0 3 0 115400 135100 115400 135 100 3 8)(8 8)(207 (191330) (32077) (185485) (30 187) 0 7 0 0 7 7 470407 279077 606705 301 274 4563 1 80051090 48020 37618 34 596 127 61 109 (449) (1019) (651) (1 297) 0 0018969251 8916 10051 9 900 7 68351116883 5171 16883 5 171 76 97 98 (974) (978) (987) (756) 13 78 (123) (738) (133) 58 18 (473) (108) (538) 40 46 40 (466) (470) (466) (470) 55 51 58 (508) (508) (521) (525) 32 (119946) (352) 101 239 Group 1 (124) - 2980 - - (467) - 2015 91 - - (680) - - 2016 Company - - - 2980 - 13188 - (467) - - - 2015 (74) (21) ------99

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 100 sheet datethatareindicativeof conditionsthataroseafterthebalancesheetdatearedealt withbywayofanote. 1.1 balance sheetdatethatprovide evidenceofconditionsthatexistedatthebalancesheetdate. Eventsafterthebalance Recognised amountsintheconsolidated annualfinancialstatementsareadjustedtoreflect eventsarisingafterthe POST-BALANCE SHEETEVENTS or cancelledhasexpired. from their use or disposal. Financial liabilities are derecognised when the relevant obligation has either been discharged All other assets are derecognised on disposal or when no future economic benefits are expected to flow to the Group assets arerecognisedonlytotheextentofGroup’s continuinginvolvementinthoseassets. financial assetsarederecognisediftheynolongercontrolled bytheGroup. However, ifcontrolisretained, financial have passed. Where substantiallyalltherisksandrewardsofownershiphavenot beentransferred orretained, the receive thecashflowshavebeentransferred orhaveexpiredifsubstantiallyalltherisksand rewardsofownership Financial assets or partsthereofarederecognised, i.e. removedfromthebalancesheet, whenthecontractual rightsto LIABILITIES OF ASSETSAND DERECOGNITION from theGroupanditscostorfairvaluecanbemeasuredreliably. resources from the Group, is recognised whenit is probable that futureeconomicbenefitsassociated with itwillflow arising from a past event the settlement of which is expected to result in an outflow of resources embodying economic flow totheGroupanditscostorfairvaluecanbemeasuredreliably. Aliability, beingapresentobligationoftheGroup benefits areexpectedtoflow, isrecognisedwhenitprobablethatthefutureeconomicbenefitsassociatedwithwill An asset, being a resource controlled by the corporation as a result of a past event from which future economic LIABILITIES OF ASSETSAND RECOGNITION period errorsareretrospectivelyrestatedunlessitisimpracticable todoso, inwhichcasetheyareappliedprospectively. is appliedprospectively. Changesinaccountingestimatesarerecognisedprofitorlosstheperiodtheyoccur. Prior If nosuchguidanceisgiven, theyareappliedretrospectivelyunlessitisimpracticable todoso, inwhichcasethechange Changes inaccountingpoliciesareaccountedforaccordancewiththetransitional provisionsintheapplicablestandard. the liabilitysimultaneously. right tosetofftheamountsexistsandintentioniseithersettleonanetbasisorrealiseasset Financial assetsandfinancialliabilitiesareoffsetthenetamountreportedonlywhenacurrentlegallyenforceable Assets and liabilities andincome and expenses are not offset unless specifically permitted byan accountingstandard. amend theauditedfinancialstatementsaftertheyhavebeenpublished. occur rather thanwhenthecash isreceivedorpaid. The ownersofthegrouporothersdonothavepowerto prepared usingaccrualaccountingwherebytheeffectsoftransactions andothereventsarerecognisedwhenthey Corporation willcontinueinoperation fortheforeseeablefuture. The consolidatedannualfinancialstatementsare The consolidatedannualfinancialstatementsarepreparedonthegoingconcernbasis, whichassumesthatthe UNDERLYING ASSUMPTIONS These accountingpoliciesareconsistentwiththepreviousfinancialyear. African Rand. The consolidated annualfinancialstatements havebeenpreparedin theCorporation’s functionalcurrency, theSouth financial statementsaredisclosedinnote1.14. of judgementorcomplexity, orareaswhereassumptionsandestimatesaresignificanttothe consolidated annual exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree Accepted Accounting Practice requirestheuseofcertaincriticalaccounting estimates. Italsorequires managementto The preparation ofconsolidatedannualfinancialstatementsinconformitywithSouth AfricanStatementsofGenerally for salefinancialassetsandliabilitiesatfairvaluethroughprofitor loss. on thehistoricalcostbasisasmodifiedbyrevaluationsofcertainlandandbuildings, investmentproperties, available and theEasternCapeDevelopmentCorporation Act. The consolidatedannualfinancialstatementshavebeenprepared Standards BoardandinthemannerrequiredbyPublicFinanceManagement Act (ActNo. 1of1999, asamended) accordance withSouth African StatementsofGenerally Accepted Accounting Practice asprescribedbythe Accounting The consolidatedannualfinancialstatementsoftheEasternCapeDevelopmentCorporation havebeenpreparedin 1. Presentation ofConsolidated Annual FinancialStatements ACCOUNTING POLICIES the corporation anditssubsidiaries. The resultsofthesubsidiaries acquiredordisposedduringtheyearareincluded The consolidatedannualfinancial statementsincorporate the assets, liabilities, income, expensesandcashflowsof CONSOLIDATED ANNUAL FINANCIALSTATEMENTS of anentitysoastoobtainbenefits fromitsactivities. controlled bytheGroup. ControlexistswheretheGrouphaspowertogovernfinancialandoperating policies Subsidiaries areentities, includingunincorporated partnerships andcompanieswithoutasharecapital, thatare 1.3 Investmentsinsubsidiaries is determinedasthedifferencebetweennetdisposalproceeds, ifany, andthecarryingamountofitem. when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment The gain or loss arising from the derecognition of an item of property, plant and equipment is includedin profit or loss another asset. The depreciationchargeforeachperiodisrecognisedinprofit orlossunlessitisincludedinthecarryingamountof If theexpectationsdifferfrompreviousestimates, thechangeisaccountedforasainaccountingestimate. The Property Leasehold improvements Computer software IT equipment Office equipment Motor vehicles Furniture andfixtures Plant andmachinery Finance leaseasset Buildings andinfrastructure Land Item The usefullivesofitemsproperty, plantandequipmenthavebeenassessedasfollows: Property, plantandequipmentaredepreciatedovertheirexpectedusefullivestoestimatedresidualvalue. retained earningswhentheassetisderecognised. The revaluationsurplusinequityrelatedtoaspecificitemofproperty, plantandequipmentistransferred directlyto the assetafterrevaluationequalsitsrevaluedamount. is restatedproportionatelywiththechangeingrosscarryingamountofassetsothat When anitemofproperty, plantandequipmentisrevalued, anyaccumulateddepreciationatthedateofrevaluation depreciation andsubsequentaccumulatedimpairmentlosses. measurement, landandbuildingsarecarriedatfairvaluethedateofrevaluationlessanysubsequentaccumulated land andbuildingswhichiscarriedatfairvalue, determinedbyaswornappraiser, everythird year. Subsequenttoinitial Property, plantandequipmentiscarriedatcostlessaccumulateddepreciationanyimpairment lossesexceptfor item ofproperty, plantandequipment, thecarryingamountofreplacedpartisderecognised. subsequently toadd to, replacepart of, or service it. Ifa replacement cost is recognised in thecarryingamountof an Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred Property, plantandequipmentisinitiallymeasuredatcost. • thecostofitemcanbemeasuredreliably. • itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtocorporation; and The costofanitemproperty, plantandequipmentisrecognisedasanassetwhen: 1.2 Property, plantandequipment recognised intheprofitorlossforperiod. Subsequent toinitialmeasurementinvestmentpropertyismeasuredatfairvalue. Fair valuegainsandlossesare FAIR VALUE reviews thesevaluationsforreasonabilityandadjustmentsaremadewhereitisdeemedtobenecessary. are subsequently stated at fair value determined by an independent sworn appraiser, every third year. Management involved inthehoteloperations. Investmentpropertiesareinitiallymeasuredatcost, includingtransaction costs, and not occupied by the Group. Hotel buildings held by the Group are classified as investment property as the group is not Investment propertyisheldforlong-termrentalyieldsorcapitalappreciationbothandcomprisesproperties 1.1 Investmentproperty

residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period.

, plantandequipment1

5 -6years 5 -20years 2 -3years 3 years 4 -6years 4 -5years 6 -10years 4 -20years 5 years 25 -50years Indefinite A verage usefullife

101

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 102 combination iftheadjustmentisprobableandcanbemeasuredreliably. An adjustmenttothecostofabusinesscombinationcontingentonfutureeventsisincludedin to therevisedestimate ofitsrecoverable amount, limited to thecarryingamountthatwould havebeenrecognised If animpairmentlosssubsequently reverses, thecarrying amountoftheasset(orcash-generating unit)isincreased asset isadjustedtoallocateits remainingcarryingvalue, lessanyresidualvalue, overitsremainingusefullife. generating unit. Subsequenttothe recognition of animpairment loss, thedepreciation or amortisationcharge forthe or loss. The lossisfirstallocated toreducethecarryingamountofgoodwillandthen otherassetsofthecash- carrying amountisreducedto the higherofitsrecoverable amount andzero. Impairment lossesarerecognisedinprofit If therecoverable amountofanasset(orcash-generating unit)isestimatedtobelessthanitscarryingamount, the taking intoaccountfuturecashflows, forecastmarketconditionsandtheexpectedusefullivesofassets. recoverable amountofthecash-generating unittowhichtheassetbelongsisestimated. Value inuseisestimated there isanyindicationthatthoseassetsmayhavesuffered animpairmentloss. Ifanysuchindicationexists, the At eachreportingdatethecarryingamountoftangibleand intangibleassetsareassessedtodeterminewhether an assetorcash-generating unit. less coststosellanditsvalueinuse. Value inuseisthepresentvalueoffuturecashflowsexpectedtobederivedfrom exceeds itsrecoverable amount. The recoverable amountisthehigherofanasset’s orcash-generating unit’s fairvalue recognised onthebalancesheetafterdeductinganyaccumulated depreciationandaccumulatedimpairmentlosses, An impairment loss on an asset or cash-generating unit is the amountby which the carryingamount, i.e. the amount 1.5 Impairmentofassets is madewherethereconsideredtobeapermanentdiminutioninthevalueofinvestment. on financialassets. Iffairvaluecannotbemeasuredreliably, theinvestmentiscarriedatcost. Anappropriateprovision in the associate is carried at fair value as an available for sale financial asset in accordance with the accounting policy The investmentsinassociatecompaniesareinitiallyrecordedatcost. Subsequenttoinitialrecognition, theinvestment to protectadvancesorasaconduitforadvances. exercises asignificantinfluenceoveritsfinancialandoperating policies, otherthaninvestmentsincompaniesacquired Associate companiesarethoseinwhichtheCorporation holdsalong-termequityinterestandoverwhichit CORPORATION ANNUAL FINANCIALSTATEMENTS period inwhichtheinvestmentisacquired. liabilities overthecostisexcludedfromcarryingamountofinvestmentandinsteadincludedasincomein The excessofthegroup’s shareofthenetfairvalueanassociate’s identifiableassets, liabilitiesandcontingent liabilities andcontingentisaccountedforasgoodwill, andisincludedinthecarryingamountofassociate. The excessofcostacquisitionoverthegroup’s interestinthenetfairvalueofanassociate’s identifiableassets, interests intheassociate. Profits andlossesresultingfromtransactions withassociatesarerecognisedonlytotheextentofunrelatedinvestors’ Distributions receivedfromtheassociatereducecarryingamountofinvestment. Any impairmentlossesaredeductedfromthecarryingamountofinvestmentinassociate. from thedategroupceasestohavesignificantinfluenceoveranassociate. group’s shareoftheprofitsorlosses the investeeafteracquisitiondate. Theuseoftheequitymethodisdiscontinued the investmentisinitiallyrecognisedatcostandcarryingamountincreasedordecreasedtorecognise sale inaccordancewithIFRS5: Non-current assetsheldforsaleanddiscontinuedoperations. Undertheequitymethod, An investmentinanassociateisaccountedforusingtheequitymethod, exceptwhentheassetisclassifiedasheld-for- CONSOLIDATED ANNUAL FINANCIALSTATEMENTS Group exercisessignificantinfluence. Associates areentities, includingunincorporated partnershipsandcompanieswithoutasharecapital, overwhichthe 1.4 Investmentsinassociates • • The costofaninvestmentinasubsidiaryistheaggregateof: accumulated impairment. In theCorporation’s separate annualfinancialstatements, investmentsinsubsidiariesarecarriedatcostlessany CORPORATION ANNUAL FINANCIALSTATEMENTS consolidation. from thedateofacquisitionoruptodisposal. Inter-company transactions andbalancesareeliminatedon

any costsdirectlyattributabletothepurchaseofsubsidiary. issued bythecorporation; plus the fairvalue, atthedateofexchange, ofassetsgiven, liabilitiesincurredorassumed, andequityinstruments through profitorloss, whichshallnotbeclassifiedoutofthefairvaluethroughprofitorlosscategory. initial recognition. Classificationisre-assessed onanannualbasis, exceptfinancialassetsdesignatedasatfairvalue Classification dependsonthepurposeforwhichfinancialinstrumentswereobtained/incurredandtakesplaceat financial asset at thedatethatimpairment isreversedshallnotexceed what thecarryingamountwould havebeen to aneventoccurringafterthe impairmentwasrecognised, subjectto the restrictionthatcarryingamountof Impairment lossesarereversed whenanincreaseinthefinancialasset’s recoverable amountcanberelated objectively Impairment lossesarerecognised inprofitorloss, exceptforavailable-for-sale equityinvestments. bankruptcy anddefaultofpayments areallconsideredindicatorsofimpairment. For amountsduetothegroup, significant financial difficultiesofthedebtor, probabilitythatthedebtorwillenter assets hasbeenimpaired. through profitorloss, todeterminewhetherthereisobjectiveevidencethatafinancialassetorgroupof At eachstatementoffinancialpositiondatethegroupassesses allfinancialassets, otherthanthoseatfairvalue IMPAIRMENT OFFINANCIAL ASSETS Loans approvedandnotyetdisbursedaredislcosedascommitments innote29. COMMITMENTS recognised inprofitorlossaspartofotherincomewhenthe group’s righttoreceivepaymentisestablished. is recognisedinprofitorlossaspartofotherincome. Dividendsreceivedonavailableforsaleequityinstrumentsare determined to be impaired. Interest on available for sale financial assets calculatedusingthe effective interestmethod Gains andlossesarisingfromchangesinfairvaluearerecogniseddirectlyequityuntiltheassetisdisposedofor a fairvalueisnotdeterminable, whicharemeasuredatcostlessaccumulatedimpairmentlosses. Available forsalefinancialassetsaresubsequentlymeasuredatfairvalue. Thisexcludesequityinvestmentsforwhich accumulated impairmentlosses. Held-to-maturity investmentsaresubsequentlymeasuredatamortisedcost, usingtheeffectiveinterestmethod, less accumulated impairmentlosses. Loans andreceivablesaresubsequentlymeasuredatamortisedcost, usingtheeffectiveinterestmethod, less established. Dividend incomeis recognised in profit orloss aspart ofotherincomewhenthegroup’s righttoreceivepayment is Net gainsorlossesonthefinancialinstrumentsatfairvaluethroughprofitlossincludeinterest. arising fromchangesinfairvaluebeingincludedprofitorlossfortheperiod. Financial instrumentsatfairvaluethroughprofitorlossaresubsequentlymeasuredvalue, withgainsandlosses SUBSEQUENT MEASUREMENT Transaction costsonfinancialinstrumentsatfairvaluethroughprofitorlossarerecognisedinloss. measurement oftheinstrument. For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial determinable, whicharemeasuredatcostandclassifiedasavailableforsalefinancialassets. Financial instrumentsaremeasuredinitiallyatfairvalue, exceptforequityinvestmentswhichafairvalueisnot liability oranequityinstrumentinaccordancewiththesubstanceofcontractual arrangement. The groupclassifiesfinancialinstruments, ortheircomponentparts, oninitialrecognitionasafinancialasset, afinancial instruments. Financial instrumentsarerecognisedinitiallywhenthegroupbecomesapartytocontractual provisionsofthe INITIAL RECOGNITION AND MEASUREMENT • • • • The groupclassifiesfinancialassetsandliabilitiesintothefollowingcategories: CLASSIFICATION 1.6 Financialinstruments Impairments togoodwillarenotreversedinsubsequentaccountingperiods. had no impairment loss been recognised in prior years. A reversal ofan impairment loss is recognised in profit or loss.

Available-for-sale financialassets Loans andreceivables Held-to-maturity investment Financial assetsatfairvaluethroughprofitorloss-designated 103

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 104 classified asfinancialassets at fairvaluethroughprofitorloss-heldfor trading. Changes inthefairvalueofderivative financialinstrumentsarerecognisedinprofitorloss astheyarise. Derivatives are contract isnotcarriedatfairvaluewithunrealisedgainsorlosses reportedinprofitorloss. derivatives whentheirrisksandcharacteristics arenotcloselyrelatedtothoseofthehost contract andthehost Derivatives embeddedinotherfinancialinstrumentsor non-financialhostcontracts aretreatedasseparate value atsubsequentreportingdates. contracts andinterestrate swaps, areinitiallymeasuredatfairvalueonthecontract date, andarere-measuredtofair Derivative financialinstruments, whicharenotdesignatedashedginginstruments, consistingofforeignexchange DERIVATIVES accounting policyforborrowingcosts. settlement orredemptionofborrowingsisrecognisedoverthe termoftheborrowingsinaccordancewithgroup’s cost, usingtheeffectiveinterestrate method. Any differencebetweentheproceeds(netoftransaction costs)andthe Bank overdrafts andborrowingsareinitiallymeasuredatfairvalue, andaresubsequentlymeasuredatamortised BANK OVERDRAFT AND BORROWINGS are initiallyandsubsequentlyrecordedatfairvalue. that arereadilyconvertibletoaknownamountofcashandsubjectaninsignificantriskchangesinvalue. These Cash and cash equivalents comprise cash on hand and demand deposits, and othershort-term highly liquid investments CASH AND CASHEQUIVALENTS interest rate method. Trade payablesareinitiallymeasuredatfairvalue, andaresubsequentlymeasuredatamortisedcost, usingtheeffective TRADE AND OTHER PAYABLES Trade andotherreceivablesareclassifiedasloansreceivables. credited againstoperating expenses intheincomestatement. off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are recognised intheincomestatementwithinoperating expenses. When atrade receivableisuncollectible, itiswritten The carryingamountoftheassetisreducedthroughuseanallowanceaccount, andtheamountoflossis flows discountedattheeffectiveinterest rate computedatinitialrecognition. is measuredasthedifferencebetweenasset’s carryingamountandthepresentvalueofestimatedfuturecash (more than30daysoverdue)areconsideredindicatorsthatthetrade receivableisimpaired. The allowancerecognised probability thatthedebtorwillenterbankruptcyorfinancialreorganisation, anddefaultordelinquency inpayments in profitorlosswhenthereisobjectiveevidencethattheassetimpaired. Significantfinancialdifficultiesofthedebtor, using theeffectiveinterestrate method. Appropriate allowancesforestimatedirrecoverable amountsarerecognised Trade receivablesaremeasuredatinitialrecognitionfairvalue, andaresubsequently measuredatamortisedcost TRADE AND OTHER RECEIVABLES keep theinvestmentonalongtermbasis. and profitslossesarerecognisedonrealisation. Theclassificationasinvestmentisdeterminedbytheintentionto Unlisted investmentsarestatedatcost, less amountswrittenofftogiverecognitionapermanentdeclineinvalue, without anydeductionfortransaction coststhatmaybeincurredonsaleordisposal. All investments are initially recognised at cost. After initial recognition, investments are measured at their fair values, INVESTMENTS Loans fromgroupcompaniesareclassifiedasfinancialliabilitiesmeasuredatamortisedcost. Loans togroupcompaniesareclassifiedasloansandreceivables. are recognisedinitiallyatfairvalueplusdirecttransaction costs. These includeloanstoandfromholdingcompanies, fellowsubsidiaries, subsidiaries, jointventuresandassociates LOANS TO (FROM)GROUPCOMPANIES because fairvaluewasnotdeterminable. Impairment lossesarealso not subsequentlyreversedfor available-for-sale equityinvestmentswhichareheldatcost Reversals ofimpairmentlossesarerecognisedinprofitorlossexceptforequityinvestmentsclassifiedasavailablesale. had theimpairmentnotbeenrecognised. Contingent assetsandcontingent liabilitiesarenotrecognised. Contingencies aredisclosedinnote28. measured asaprovision. When theGrouphasacontract thatisonerous, thepresentobligationunder contract shallberecognisedand Provisions arenotrecognised for futureoperating losses. the reimbursementshallnotexceedamountofprovision. the entitysettlesobligation. The reimbursementshallbetreatedasaseparate asset. The amountrecognisedfor reimbursement shallberecognisedwhen, andonlywhen, itisvirtuallycertainthatreimbursementwillbereceivedif Where someoralloftheexpenditurerequiredtosettleaprovision isexpectedtobereimbursedbyanotherparty, the The amountofaprovisionisthepresentvalueexpenditure expectedtoberequiredsettletheobligation. • • • Provisions arerecognisedwhen: 1.9 Provisions financial positionbysettingupthegrant asdeferredincome. Government grants relatedtoassets, includingnon-monetarygrants atfairvalue, arepresentedinthestatementof period inwhichitbecomesreceivable. purpose of givingimmediate financial support tothe entitywithnofuturerelatedcostsisrecognisedasincome ofthe A governmentgrant thatbecomes receivableascompensationforexpensesorlossesalreadyincurredthe they areintendedtocompensate. Government grants arerecognised asincomeovertheperiodsnecessarytomatchthemwithrelatedcoststhat • • Government grants arerecognised whenthereisreasonableassurance that: government assistance portion of project spend at the balance sheet date is presented as deferred income. No value is recognised for other they areforexpensesorlossesalreadyincurred, theyarerecognisedinprofitorlossimmediately. Theunrecognised recognised inprofit orlossonasystematicbasis overtheperiodsnecessary tomatchthemwith therelated costs. When When theconditionsattachingtogovernmentgrants havebeenmetandthegrants havebeenreceived, theyare qualifying undercertaincriteria. A governmentgrant isassistancebygovernmentintheformoftransfers ofresources. assistance isactionbygovernmentdesignedtoprovideaneconomicbenefitspecificentityor rangeofentities Government includesgovernmentagenciesandsimilarbodieswhetherlocal, nationalorinternational. Government 1.8 Governmentgrantsanddeferred income payable. Dividendsfortheyearthataredeclaredafterbalancesheetdatedisclosedinnotes. Distributions toholdersofequity instruments are recognisedasdividendswithinequityintheperiodwhichthey to theallocationofproceeds. a compoundfinancialinstrumentareallocatedtotheliabilityandequitycomponentsofinproportion instrument theamountseparately determinedfortheliabilitycomponent. Transaction coststhatrelatetotheissueof the equitycomponentisinitiallymeasuredatresidualamountafterdeductingfromfairvalueofcompound When thegroupissuesacompoundinstrument, i.e. aninstrumentthatcontainsbothaliabilityandequitycomponent, loss onthepurchase, sale, issueorcancellationofthegroup’s equityinstruments. measured attheproceeds received less incremental directlyattributableissuecosts. No gain is recognisedin profit or Consideration paid or received for equity instruments is recognized directly inequity. Equityinstruments are initially The group’s ordinarysharecapitalisclassified asequity. • • • • when: Ordinary sharecapital, preferenceshare capital oranyfinancialinstrumentissuedbythegroupisclassifiedasequity 1.7 Share capitalandequity

a reliableestimatecanbemadeoftheobligation. it the grouphasapresentobligationasresultofpastevent; the gr the groupwillcomplywithconditionsattachingtothem; The instrumentrepresentsaresidualinterestintheassetsofgroupafterdeductingallitsliabilities Settlement inthegroup’ unfavour The instrumentdoesnotprovidefortheexchangeoffinancialinstrumentsunderconditionsthatarepotentially P is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and ayment ofcash, intheformofadividend orredemption, isatthediscretionofgroup; ants willbereceived. able tothegroup; s ownequityinstrumentsisforafixednumberofatprice; and

and . 105

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 106 and reductioninfuturecontributions totheplan. Any assetislimitedtounrecognised actuariallossesandpastservicecosts, plusthepresentvalueofavailablerefunds by thefairvalueofplanassets. obligation asadjustedforunrecognised actuarialgainsandlossesunrecognisedpast service costs, andreduces The amountrecognisedinthestatementoffinancialposition representsthepresentvalueofdefinedbenefit benefit planispresentedasthenetofamountrecognised forareimbursement. all other respects, the asset is treated inthe same way as plan assets. In profit or loss, the expense relating to a defined benefit obligation, therighttoreimbursementisrecognisedasaseparate asset. Theassetismeasured atfairvalue. In When itisvirtuallycertainthatanotherpartywillreimbursesome oralloftheexpenditurerequiredtosettleadefined committed tocurtailmentorsettlement. Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the group is demonstrably Actuarial gainsandlossesarerecognisedintheyearwhich theyarise, inothercomprehensive income. employees. Actuarial gainsorlosseswithinthecorridorarenot recognised. corridor), thatportionisrecognisedinprofitorlossovertheexpectedaverage remainingservicelivesofparticipating percent ofthegreaterpresentvalueprojectedbenefitobligationandfairplanassets(the To theextentthat, atthebeginningoffinancialyear, anycumulativeunrecognisedactuarial gainorlossexceedsten amortised onastraight linebasis over theaverage perioduntiltheamendedbenefitsbecomevested. Past service costs are recognised immediately totheextent that thebenefitsarealreadyvested, andare otherwise valuation isperformedatanearlierdate. Consideration isgiventoanyevent thatcouldimpactthefundsuptoendofreportingperiodwhereinterim Actuarial valuationsareconductedonanannualbasisbyindependentactuariesseparately foreachplan. For definedbenefitplans thecostofprovidingbenefitsisdeterminedusingprojectedunitcreditmethod. DEFINED BENEFITPLANS benefit plan. plans wherethegroup’s obligationundertheschemesisequivalenttothosearisinginadefinedcontributionretirement Payments madetoindustry-managed(orstateplans)retirementbenefitschemesaredealtwithasdefinedcontribution Payments todefinedcontributionretirementbenefitplansarechargedasanexpensetheyfalldue. DEFINED CONTRIBUTIONPLANS adjusted forunrecognisedactuarialgainsandlosses. annually. The amountrecognisedinthebalancesheetrepresentspresentvalueofdefinedbenefitobligationas The costofprovidingdefinedbenefitsisdeterminedusingtheprojectedunitcreditmethod. Valuationsareconducted POST-EMPLOYMENT BENEFITOBLIGATIONS obligation tomakesuchpaymentsasaresultofpastperformance. The expectedcostofperformancebonuspaymentsisrecognisedasanexpensewhentherealegalorconstructive render servicethatincreasestheirentitlementor, inthecaseofnon-accumulatingabsences, whentheabsencesoccur. The expectedcostofshort-termaccumulatingcompensatedabsencesisrecognisedasanexpensetheemployees of short-termemployeebenefitsisrecognisedintheperiodwhichservicerenderedandnotdiscounted. cost ofprovidingemployeebenefitsisrecognisedinprofitorlosstheperiodtheyareearnedbyemployees. Thecost Employee benefitscostincludeallformsofconsideration giveninexchangeforservicesrenderedbyemployees. The SHORT-TERM EMPLOYEE BENEFITS 1.11 Employeebenefits Dividends arerecognised, inprofitorloss, whentheGroup’s righttoreceivepaymenthasbeenestablished. basis, ifmorerepresentativeofthetimepatternuser’s benefit. Operating leaseincomeisrecognisedasonastraight-line basisovertheleasetermoranothersystematic Interest isrecognised, inprofitorloss, usingtheeffectiveinterest rate method. for goods, servicesandoperating leaseincomeprovidedinthenormalcourseofbusiness, netofvalueaddedtax. Revenue ismeasuredatthefairvalueofconsideration receivedorreceivableandrepresentstheamounts 1.10 Revenue by thestatementoffinancial position date. is realisedortheliabilitysettled, basedontaxrates (andtaxlaws)thathavebeenenactedorsubstantively Deferred taxassetsandliabilitiesaremeasuredattherates thatareexpectedtoapplythe periodwhentheasset can beutilised. it isprobablethatfuturetaxableprofitwillbeavailableagainst whichtheunusedtaxlossesandSTCcredits A deferredtaxassetisrecognisedforthecarryforwardofunused taxlossesandunusedSTCcreditstotheextentthat reverse intheforseeablefuture. is abletocontrolthereversaloftemporary differenceanditisprobablethatthetemporary differencewillnot Deferred tax arising on investments in subsidiaries, associates and joint ventures is recognised except where the Group Temporary differencesarebetweenthecarrying amountofanassetorliabilityanditstaxbase. tax liabilityistheamountofincometaxespayableinfuture periodsinrespectoftaxabletemporary differences. have beenenactedorsubstantiallyatthestatement of financialpositiondateandisnotdiscounted. Adeferred A deferredtaxliabilityisrecognisedfortaxabletemporary differences, unlessspecificallyexempt, atthetax rates that have beenenactedorsubstantiallyatthestatementoffinancialpositionandisnotdiscounted. which deductibletemporary differences canbeutilised, unlessspecifically exempt. Itismeasuredatthetax rates that A deferredtaxassetisonlyrecognisedtotheextentthatitprobabletaxableprofitswillbeavailableagainst differences, thecarryforwardofunusedtaxlossesandcredits. A deferredtaxassetistheamountofincometaxesrecoverable infutureperiodsrespectofdeductibletemporary DEFERRED TAX are notdeductibleusingtaxrates that areapplicabletothetaxableincome. The chargeforcurrenttaxisbasedontheresultsyearasadjustedincomethatexemptandexpenses CURRENT TAX 1.13 Tax Minimum leasepaymentsdueinthenext12monthstofiveyearsaredislcosedascommitmentsnote29. are expensedintheperiodtheyincurred. relevant lease, oranotherbasisifmorerepresentativeofthetimepatternGroup’s benefit. Anycontingentrents Rentals payableunderoperating leases arerecognisedinprofitorlossonastraight-line basisoverthetermof OPERATING LEASES–LESSEE Income forleasesisdisclosedunderrevenueintheincomestatement. leased assetandrecognisedasanexpenseovertheleasetermonsamebasisincome. Initial directcostsincurredinnegotiatingandarranging operating leasesareaddedtothecarryingamountof Operating leaseincomeisrecognisedasanonastraight-line basisovertheleaseterm. OPERATING LEASES-LESSOR balance oftheliability. charge isallocatedtoeachperiodduringtheleasetermsoasproduceaconstantperiodicrate ofontheremaining The leasepaymentsareapportionedbetweenthefinancechargeandreductionofoutstandingliability.The finance borrowing rate. The discountrate usedincalculatingthepresentvalueofminimumleasepaymentsiscompany’s incremental is includedinthebalancesheetasafinanceleaseobligation. leased propertyor, iflower, thepresent value oftheminimumleasepayments. The correspondingliabilitytothelessor Finance leasesarerecognisedasassetsandliabilitiesinthebalancesheetatamountsequaltofairvalueof FINANCE LEASES–LESSEE ownership. A lease is classified as an operating lease ifit does nottransfer substantiallyallthe risks and rewards incidental to A leaseisclassifiedasafinanceifit transfers substantiallyalltherisksandrewardsincidentaltoownership. 1.12 Leases 107

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 108 All otherborrowingcostsarerecognised asanexpenseintheperiodwhichtheyareincurred. or salearecomplete. Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use Capitalisation issuspendedduringextendedperiodsinwhich activedevelopmentisinterrupted. • • • The capitalisationofborrowingcostscommenceswhen: • • borrowing costseligibleforcapitalisationisdeterminedasfollows: capitalised aspartofthecostthatassetuntilsuchtimeisreadyforitsintendeduse. The amountof Borrowing coststhataredirectlyattributabletotheacquisition, constructionorproductionofaqualifyingassetare using theeffectiveinterestrate method. Interest bearingborrowingsareinitiallymeasuredatfairvalue, andaresubsequentlymeasuredatamortisedcost, 1.15 Interest bearingborrowing andborrowing costs and arereviewedbytheDevelopmentInvestmentCommittee. the projectedfutureactivitiesofentity. These valuesareestablishedeitherbyindependentvaluersormanagement The valuationofunlistedinvestmentsisbasedonthediscountedfreecashflowstakingintoaccount INVESTMENT VALUATIONSUNLISTED For valuationmethodologies utilisedtofairvalueinvestmentproperties, refertonote2. FAIR VALUE OFINVESTMENTPROPERTIES risks. Refertonote28forfurtherinformationonprovisions, contingentliabilitiesandassets. The group, intheordinary course of business, enters intotransactions thatexpose the group to tax, legaland business PROVISIONS, CONTINGENTLIABILITIES AND CONTINGENT ASSETS portfolios andtheloanlossdataavailabletolendingdivision. The implementationoftheseprinciplesisatacorporation levelandwillbespecifictothenatureoftheirindividualloan evident duringtheemergenceperiod. that areostensiblyperformingatthecalculationdateimpaired, andobjectiveevidenceofthatimpairmentbecomes becoming evident, whichisknownasthe ‘emergence period’. The IBNRprovisionisbasedontheprobabilitythatloans a period of time will elapse between the occurrence of animpairment event andobjectiveevidenceofthe impairment is toallowforlatentlossesonaportfolioofloansandadvancesthathavenotyetbeenindividuallyevidenced. Generally, The grouphascreatedaportfolioprovisionforincurredbutnotreported(IBNR)losses. The purposeoftheIBNRprovision consideration ofanyanticipatedfuturecreditlosses. objective evidenceofimpairmentexists. The discountrates usedtocalculatetherecoverable amountexclude Credit impairmentisbasedondiscountedestimatedfuturecashflowsanassetorgroupofassets, wheresuch which animpairmentlossmayberecognised. occurred since initial recognition. This necessitates the establishment of ‘impairment triggers’ on the occurrence of losses areincurredonlyifthereisobjectiveevidenceofimpairmentasaresultoneormorepasteventsthathas The Group adopted an incurred-loss approach to impairment in accordance with accounting policy 1.5. Impairment CREDIT IMPAIRMENT OFLOANS AND ADVANCES as setoutbelow. statements thecorporation hasassumedcertainkeysourcesofestimationinrecordingvariousassetsandliabilities, interpretations adoptedbythe Accounting Practices Board. Inthepreparation ofthe consolidated annualfinancial The consolidatedannualfinancialstatementsarepreparedinaccordancewithandcomplySAGAAPits 1.14 Keyassumptionsconcerningthefuture andkeysources ofestimation

activities thatarenecessarytopreparetheassetforitsintended useorsaleareinprogress borrowing costshavebeenincurred, expenditures fortheassethaveoccurred; obtaining aqualifyingasset. The borrowingcostscapitaliseddonotexceedthetotal borrowingcostsincurred. W temporary investmentofthoseborrowings. Actual borrowing eighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of costs on funds specifically borrowedforthe purpose of obtaininga qualifying asset less any and

. requires thefollowing(effective from1 April 2008): National Treasury practice noteno. 4of2008/2009whichwasissuedintermssections 76(1)to76(4)ofthePFMA c) b) a) in contravention oforthatisnotinaccordancewitharequirementanyapplicablelegislation, including Irregular expenditureasdefinedinsection1ofthePFMAis expenditure otherthanunauthorisedexpenditure, incurred 1.21 Irregular expenditure financial performance. with thenatureof the expense, and where recovered, itis subsequently accountedforas revenue inthestatement of comprehensive incomeintheyearthatexpenditurewas incurred. The expenditureisclassifiedinaccordance All expenditurerelatingtofruitlessandwasteful isrecognisedasanexpenseinthestatementof been exercised. Fruitless expendituremeanswhichwasmadeinvainandwouldhavebeen avoidedhadreasonablecare 1.20 Fruitlessandwastefulexpenditure group classifiedasheldforsale. A non-currentassetisnotdepreciated(oramortised)whileitclassifiedasheldforsale, orwhileitispartofadisposal less coststosell. Non-current assetsheldforsale(ordisposalgroup)aremeasuredatthelowerofitscarryingamountandfairvalue classification. the sale, whichshouldbeexpectedtoqualifyforrecognitionasacompletedsalewithinoneyearfromthedateof asset (ordisposalgroup)isavailableforimmediatesaleinitspresentcondition. Managementmustbecommittedto rather thanthroughcontinuinguse. This conditionisregardedasmetonlywhenthesalehighlyprobableand Non- currentassetsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredthroughatransaction 1.19 Non-current assetsheldfor sale Inventories aremeasuredatthelowerofcostandnetrealisablevalueonfirst-in-first-outbasis. Inventories aremeasuredatthelowerofcostandnetrealisablevalue. 1.18 Inventories Computer software, other: 1-5years The estimatedusefullivesareasfollows: for sale. tested forimpairmentateachreportingdate. Otherintangibleassetsareamortisedfromthedatetheyavailable lives ofintangibleassetsunlesssuchareindefinite. Intangibleassetswithanindefiniteusefullifearesystematically Amortisation ischargedtotheStatementofFinancialPerformanceonastraight -linebasisovertheestimateduseful AMORTISATION Financial Performanceasanexpensewhenincurred. benefits embodiedinthespecificassettowhichitrelates. AllotherexpenditureisrecognisedintheStatementof Subsequent expenditureoncapitalisedintangibleassetsisonlywhenitincreasesthefutureeconomic SUBSEQUENT EXPENDITURE as anexpensewhenincurred. specific software. ThecostofminorsoftwareandlicencesarerecognisedintheStatementFinancialPerformance Acquired computersoftwarelicencesarecapitalisedonthebasisofcostsincurredtoacquireandbringuse COMPUTER SOFTWARE 1.17 Intangibleassets produce atfairvaluelessestimatedpoint-of-salecostsisincludedinprofitorlossfortheperiodwhichitarises. on themarketpricesofsimilarage, breedandgeneticmerit. A gainorlossarisingoninitialrecognitionofagricultural Biological assetsaremeasuredattheirfairvalueestimatedpoint-of-salecosts. The fairvalueisdeterminedbased 1.16 Biologicalassets

any provinciallegislationproviding forprocurementproceduresinthatprovincialgovernment. the State PFMA, or Tender Board Act, 1968(ActNo. 86 of1968), oranyregulationsmadeinterms ofthe Act; or

109

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 110 Other relatedpartytransactions are alsodisclosedintermsoftherequirementsIAS24. regarded askeymanagementperthedefinitionofstandard. the activitiesofentity. All individualsfromthelevelofexecutivemanagementuptoBoardDirectorsare Key managementisdefinedasindividualswiththeauthorityandresponsibilityforplanning, directingandcontrolling Cape government. Onlypartieswithintheprovincialsphereofgovernmentwillbeconsideredtorelatedparties. The ECDCoperates inaneconomic environmenttogetherwithotherentitiesdirectlyorindirectlyownedbytheEastern 1.22 Relatedparties subsequently accountedforasrevenueintheStatementofFinancialPerformance. expenditure isaccountedforasintheStatementofFinancialPerformanceandwhererecovered, itis economic entity’s supplychainmanagement policy. Irregularexpenditureexcludesunauthorisedexpenditure. Irregular expenditure register. Irregularexpenditureisthatcontrary tothe Act orisincontravention ofthe expenditure item, bedisclosedassuchin thenotetofinancialstatementsandupdatedaccordinglyinirregular not beencondonedandnopersonisliableinlaw, theexpenditurerelatedtheretomustremain againsttherelevant statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has is not possible, theaccountingauthoritymay write offtheamountanddisclose such intherelevantnotetofinancial liable inlaw. Immediatestepsmustthereafterbetakentorecovertheamountfromperson concerned. Ifrecovery liability fortheirregularexpenditurecanbeattributedtoaperson, adebtaccountmustbecreatedifsuchpersonis the National Treasury ortherelevantauthoritymustberecordedappropriatelyinirregularexpenditureregister. If Irregular expenditurethatwasincurredandidentifiedduringthecurrentfinancialyearwhichnotcondonedby statements mustbeupdatedwiththeamountcondoned. financial yearand is only condonedinthefollowing financial year, the register and the disclosure note to the financial exception ofupdatingthenotetofinancialstatements. Whereirregularexpenditurewasincurredintheprevious being awaitedatyearendmustberecordedintheirregularexpenditureregister. Nofurtheraction isrequiredwiththe Irregular expenditurethatwasincurredandidentifiedduringthecurrentfinancialyearforwhichcondonementis the financialstatements. expenditure register. Insuchaninstance, nofurtheractionisalsorequiredwiththeexceptionofupdatingnoteto year endand/orbeforefinalisationofthefinancialstatementsmustalsoberecordedappropriatelyinirregular Irregular expenditurethatwasincurredandidentifiedduringthecurrentfinancialwhichcondonedbefore

Company 2014

industrial, residentialandcommercialproperties. surrounding KingSabathaDalindyebo, Mnquma, BuffaloCityandChrisHanimunicipalities. The portfolioconsists mainlyof These propertiesaresituatedthroughouttheEasternCape Investment property Investment property Investment property RECONCILIATION OFINVESTMENTPROPERTY-COMPANY Investment property Investment property Investment property RECONCILIATION OFINVESTMENTPROPERTY-GROUP property Investment property Investment Group 2. Investmentproperty

Group 2016 Company 2015 Group 2015 Company Group 2014 Company 2016 FINANCIAL STATEMENTS NOTES

1 032197 1 097747 valuation valuation

Cost/ Cost/ TO THE CONSOLIDATEDTO THE

Accumulated Accumulated depreciation depreciation 2016 2016

- -

1 032197 1 097747 Carrying Carrying value value

1 713981 2 051831 valuation valuation Opening Opening Opening Opening balance balance balance balance 874 361 929 461 658 123 929 461 Cost/ Cost/

, withthemajorityofpropertiesconcentrated intheareasand

Accumulated Accumulated depreciation depreciation Disposals Disposals Additions Disposals Opening Opening balance balance (10 653) 730 371 874 361 122 985 (12 452) 2015 2015 (9 196)

- -

current assets current assets (to)/from non (to)/from non

held forsale held forsale Reclassified Reclassified T Disposals Disposals Disposals Carrying Carrying ransfers value value 874 361 929 461 (12 452) (22 109)

(9 196) (4 741) 2 384 6 554

Other changes, current assets current assets (to)/from non (to)/from non (1 280060) Classified as held forsale held forsale held forsale Reclassified Reclassified movements T T valuation valuation 2 051831 ransfers ransfers Cost/ Cost/ 730 371 (4 741) 5 450 6 554 2 384 4 300

Accumulated Accumulated depreciation depreciation adjustments adjustments adjustments adjustments adjustments adjustments Fair value Fair value Fair value Fair value Fair value Fair value 149 888 171 773 234 590 163 588 177 923 2014 2014 75 067

- -

2 051831 1 032197 2 051831 1 097747 Carrying Carrying 730 371 730 371 874 361 929 461 value value T T T T T T otal otal otal otal otal otal 111

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 112 majority ofthesepropertiesare situated onforestryestatesandhotelsthe Wild Coast. Tribal land: Thisgroupcomprisesmainlyof propertieswheretheCorporation hasassumed “Permission toOccupy”. The within thisgroup, which comprisemainlyentitlementintermsofProclamation1 2001bythePremierofEasternCape. Government: The title over land is registered to government. The Corporation is in the process of analysing the properties Eastern Cape. in terms of theEastern Cape Development Corporation Act, No2of 1997, readwith Proclamation 1 of2001 by Premier ofthe Municipality T Government Corporation Corporation 2014 Municipality T Government Corporation Corporation 2015 Municipality T Government Corporation Corporation 2016 Freehold titleisheldasfollows: benefits andrewardswhentheCorporation incurstherisksincidentaltoownership. held areincludedininvestmentpropertywhentheymanagedbytheCorporation andresultinthereceiptofeconomic Freehold titleisheldbytheCorporation forthemajority of properties, butnotforall. Properties for whichfreeholdtitleisnot the propertiesarevacantorundevelopedlandunoccupiedbuildings. Investment propertiesaresubjecttooperating leaseswith tenants. Norentalwaschargedoncertainproperties, mainlybecause based oncomparable salesintheareaoronincomeearningpotentialofbuilding. qualifications The fairvaluesoftheInvestmentPropertiesarebasedonvaluationsbyindependentvaluerswhoholdrelevantprofessional Other Industrial V Commercial Residential Corporation 2014 Other Industrial V Commercial Residential Corporation 2015 Other Industrial V Commercial Residential Corporation 2016 Corporation The categoriesoffreeholdtitlearefurtherdescribedasfollows: ribal ribal ribal acant acant acant

land land land land land land

: Freehold titleisregisteredtotheCorporation oroneoftheformercorporations consolidated undertheCorporation and have recent experience in the location and category of the property being valued. Valuations are normally

Percentage Percentage Percentage Percentage Percentage Percentage 100 100 100 100 100 100 11 49 36 12 48 33 12 48 34 78 10 79 82 1 3 4 3 3 3 5 8 9 4 7 4 6 8

1 032197 1 032197 730 874 730 874 360 257 106 430 291 122 494 351 570 696 846 V V V V V V 25 79 26 19 36 28 37 59 63 40 62 74 39 65 80 alue alue alue alue alue alue 7 371 361 371 361 879 454 172 853 069 449 197 028 378 374 492 044 946 562 032 036 692 656 734 316 285 434 282 953 904 419 218

Number Number Number Number Number Number 1 1 1 813 1 1 1 813 1 1 1 829 784 829 784 951 362 442 937 344 431 961 361 401 728 699 719 28 10 63 28 14 43 26 10 58 62 12 60 12 79 11 and equipment Leasehold improvements Other property IT Office Motor vehicles Furniture andfixtures Plant andmachinery Group Company Finance leaseasset Buildings andinfr Land Group 2016 RECONCILIATION OFPROPERTY, PLANT AND EQUIPMENT-GROUP T plant andequipment Other property IT equipment Office Motor Furniture andfixtures Leasehold property infr Buildings and Land T plant andequipment Other property improvements Leasehold IT equipment Office Motor vehicles Furniture andfixtures Plant andmachinery Finance leaseasset infr Buildings and Land operty, plantandequipment 3. the Corporation. Municipality: adjustments maybeeffectedtothevaluationofthesepropertiesifnecessary. of thesepropertiesmaybeoverstated. Intermsoftheaccountingpolicytheserightsareassessedonanannualbasisand and will receive economic benefits in perpetuity. Inthe eventthat therightof occupation isdisputed orexpires, the valuation The valuationmethodused to valuetheseproperties assumes that theCorporation has the right tooccupythese properties benefits fromtheiruseandcarriestherisksthatareincidentaltoownership. been reducedtowriting. However, theCorporation hasoccupiedthesepropertiesforanumberofyearsandderiveseconomic The Corporation’s right to occupy properties to the value of R65.4 million (2015: R62.2 million) included in the above, has not otal otal equipment astructure astructure Pr

equipment equipment equipment vehicles

The titleisregisteredtodifferentmunicipalities within theEasternCape, butimprovementshavebeenmadeby , plant , ,

astructure

valuation valuation

47 422 93 366 Cost/ Cost/ 27 191 10 767 11 543 55 911 1 766 9 854 2 984 1 523 3 265 2 301 2 552 3 490 1 603 4 465

655 184 734

Accumulated Accumulated depreciation depreciation Opening balance (23 601) (33 360) (11 862) 2016 2016 94 427 13 777 22 491 (1 764) (9 076) (2 206) (1 016) (8 813) (2 021) (9 918) (1 140) (2 462) (4 281) (1 073) 48 943 1 615 1 054 4 315 (542) (184) (603)

502 684 138 908

- - -

Additions Carrying Carrying value value 23 821 60 006 18 378 44 049 1 297 3 265 1 412 1 028 7 262 4 465 703 386 147 778 113 778 507 280 849 131 530

11 50

2 ------

and disposals T valuation valuation ransfers 142 622 Cost/ Cost/ 46 482 20 737 10 365 35 486 60 211 27 191 2 863 3 075 3 171 1 603 4 315 1 766 9 211 2 719 1 523 3 265 (21)

(21) 796 623 184

------

Accumulated Accumulated Classified as depreciation depreciation held forsale (28 565) (22 022) (48 195) (13 777) (14 575) (12 995) (11 268) 2015 2015 (2 361) (6 960) (9 681) (1 460) (2 263) (1 762) (8 806) (2 017) (8 219) (161) (658) (549) (526) (184) (508) (15) (12) (17)

(8) - - - - -

T Carrying Carrying ransfers value value (4 300) 24 460 94 427 13 777 22 491 48 943 (4 300) 18 972 1 615 1 054 4 315 1 015 3 265

502 684 138 908 405 702

97 4 ------

Revaluations 676 752 604 193 41 773 valuation valuation 33 298 11 903 24 054 6 181 1 4 071 7 651 8 136 1 766 9 262 2 688 3 265 150 150 554 184 Cost/ Cost/ 80 239 ------

Accumulated Accumulated Depreciation depreciation depreciation (133 661) (104 916) (16 885) (15 503) 2014 2014 (2 983) (3 639) (1 583) (3 727) (3 332) (1 759) (8 366) (1 832) (4 277)

(502) (192) (249) (801) (524) (594) (936) (486) (165) (72) (49) (25) ------

Carrying Carrying 543 091 499 277 value value T 60 005 24 888 otal 44 049 17 795 19 777 1 411 1 028 7 262 2 542 2 488 3 924 8 571 8 136 4 465 3 265 280 849 131 530 303 896 856 68 19 55 7 - - - 113

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 114

Other property IT equipment Office Other property, plantandequipment Motor vehicles Other property IT equipment IT Office Other property, plantandequipment Furniture andfixtures Office IT equipment Furniture andfixtures Motor Office equipment Finance leaseasset Plant andmachinery Furniture andfixtures Buildings andinfr Land Motor Furniture andfixtures Leasehold property Buildings andinfr Land Buildings andinfr Land RECONCILIATION OFPROPERTY, PLANT AND EQUIPMENT-COMPANY Finance leaseasset infr Buildings andinfr Land plant Other property improvements Leasehold IT equipment Office Motor vehicles Furniture andfixtures Plant andmachinery Finance leaseasset infr Buildings and Land Group 2015 Company 2014 Company 2015 Group 2014 Company 2016 equipment astructure astructure

and equipment equipment equipment equipment vehicles vehicles

equipment

, plantandequipment , plantandequipment ,

astructure astructure astructure astructure

543 091

Opening balance 499 277

17 795 2542 8 136 2 488 3 924 8 571

303 55

Additions

651 369 125 28 72 57

- - - - -

movements Additions Opening business through balance 494 406 474 534 45 946 (1 282) 20 737 24 091

7 998 3 561 8 085 442 913 262 182 521

84 71 87 66

- - -

and disposals (475 661) T Additions Opening Opening (449 529) balance balance ransfers (16 420) 55 631 15 584 25 663 24 888 36 925 (2 148) (2 852) (3 821) 19 475 19 777

2 094 2 122 3 265 3 265 (190) (669) 117 896 936 100 (32) 519 856

61 65 68 30 19

7 1 - - - - -

combinations Revaluations Additions Additions Additions Opening business through balance 11 891 24 460 18 972 1 081 1 985 9 285 1 015 3 265 (458) (458) 408 209 449 405 179 337 702 528 312 34 97 32 69 43

4 ------

and disposals

changes and T Disposals Disposals Additions ransfers Other

(2 490) 1 019 5 106 2 303 1 523 3 595 (277)

(19) 704 (10) (10) (53) 265 (18) (12)

(4) (4) 50

------and impairment and movements

Other changes Revaluations Revaluations Depreciation (7 569) Disposals (1 083) (3 942) 7 385 4 648 7 335 1 523 3 137 (130) (640) (218) (229) (747) (524) (15) 458 (15) (56) 458 (12) 50 ------

Depreciation Depreciation Depreciation Depreciation Impairment (25 945) (16 679) (19 499) (1 643) loss (3 331) (2 310) (1 431) (5 515) (6 320) (9 517) (3 942) (981) (181) (410) (110) (699) (316) (189) (828) (818) (508) (191) (594) (159) (507) (468) (185) (508) (64) (34) (46) (40) (16) (19) (52) (78) (46) (2) (3)

------

543 091 499 277 T T T T T 23 821 94 427 otal otal otal otal otal 17 795 24 888 24 460 18 378 13 777 22 491 48 943 19 777 18 972 2 542 2 488 3 924 8 571 8 136 1 615 1 054 4 315 3 265 1 015 3 265 3 265 303 778 896 113 778 405 507 856 502 684 138 908 702 68 19 97 55 7 2 4 - Mthatha Hotel(Pty)LTD istheoperating companyoftheUmthathaHolidayInn. The groupholdsa49.95%(2015:49.95%)interestintheassociateofwhich9.95%(2015:9.95%)isheldbyCorpor Mthatha Hotel(Pty)Ltd 5. Impairment ofinvestmentinsubsidiaries Various subsidiaries 4. Office Buildings The carryingvalueoftherevaluedassetsundercostmodelwouldhavebeen: The officebuildingsarere-valuedindependentlyevery3years. of thepropertybeingvalued. The valuersarenotconnectedtothegroup. independent valuerswhoholdtherelevantprofessionalqualificationsandhaverecentexperienceinlocationcategory The effective date oftherevaluationswas 31 March2014. The fairvalues of theofficebuildings arebased onvaluations by REVALUATIONS T Finance leaseasset T Property, plantandequipment are keptattheregisteredofficesofcompaniesconcerned. Registers containing details offinanceleaseassets andproperty, plant andequipment, including details ofanyencumbrances, SECURITY PLEDGED AS Name ofcompany Name ofcompany erms erms Investmentsinassociates Investments insubsidiaries and and conditions conditions

24 764

2016 2016 23 -

49 794 24 582

2015 2015 39

25 301 27 075

2014 2014 55

Listed/Unlisted 14 523

2016

13 787 2015

amount 2016 amount 2016 24 342 14 217 26 798 23 012 (1 330) 24 342 Carrying Carrying 2014

amount 2015 amount 2015 Carrying Carrying 24 342 23 919 23 012 (1 330) 24 342

amount 2014 amount 2014 Carrying Carrying 24 21 613 23 006 (1 330) 24 336 ation. 336 115

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 116 Figures inRandthousand Non-current liabilities Non-current assets Therefore thereisnorevenuenorassetsthatcanbeconsolidated intheECDCGroupfinancialstatements. capital tocommencewithoperations. Therefore Worthytrade (Pty)Ltddidnotrealisetheenvisagedreturnfromitsinvestment. The ECDCgranted aloanto Worthytrade 93(Pty)Ltdtoinvestinanewventure. However, theventurecouldnotraise adequate Impairment ofloanstoassociates no fixedtermsofrepayment. The loanisinterestfreeandhas W Associates Cape ProvincialGovernment. However, theECDChasnocontroloverthiscompany, butassuchithasnotbeenconsolidated. Eastern CapeDevelopmentCorporation (ECDC)has100%shareholdinginthiscompany, whichitholdsonbehalfoftheEastern Included inthebalancesowedto/(from)groupcompaniesaboveisaloanbyMagwaEnterprise Impairment ofloanstosubsidiaries no fixedtermsofrepayment. The loanisinterestfreeandhas T TDC PropertyInvestments(Pty)Ltd no fixedtermsofrepayment. The loanisinterestfreeandhas (INTRASHARE) T no fixedtermsofrepayment. The loanisinterestfreeandhas Umtata SmallIndustriesComplex(Pty)L no fixedtermsofrepayment. The loanisinterestfreeandhas T no fixedtermsofrepayment. The loanisinterestfreeandhas the EasternCape(CIMEC) Centre forInvestmentandMarketingin no fixedtermsofrepayment. The loanisinterestfreeandhas Eastern CapeMarketing are containedintheloanagreement. of sevenyearsanddetailssecurity The loanisrepayableat8.25%overaperiod Oceanwise (Pty)Ltd no fixedtermsofrepayment. The loanisinterestfreeandhas Magwa Enterprise no fixedtermsofrepayment. The loanisinterestfreeandhas Automotive IndustrialDevelopmentCentre(AIDC) no fixedtermsofrepayment. The loanisinterestfreeandhas Windsor Hotel(Pty)L Subsidiaries 6. Loansto(from) group companies ransdev Properties(Pty)LTD ranskei ShareInvestmentCompanyLimited ransido (Pty)LTD orthytrade 93(Pty)LTD

Tea (Pty)LTD

Authority (Pty)LTD (ECMA)

TD (USICO)

(13 762)

13 762 13 762 (4 333)

4 333 4 333 2016

------

(4 333) 4 333 4 333 Group 2015

------

(4 333) 4 333 4 333 2014

------

(32 974) (32 974) (57 913) (90 835) (40 417) (15 635) 78 137 15 372 13 762 24 939 (4 333) 57 861 (1 861) 5 584 4 333 4 333 2 000 2016 919

- - -

Company (30 579) (30 579) (52 720) (87 760) (35 168) (15 662) 2015 78 113 13 363 22 141 (4 333) 57 181 (1 890) 9 348 5 584 1 028 4 333 4 333 Tea (Pty)Ltd. The 2 000 403

62 -

(22 146) (22 146) (42 531) (77 717) (24 937) (15 680) 2014 78 095 11 609 20 385 (4 333) 55 571 (1 914) 4 920 1 027 4 333 4 333 2 000 400 51 - -

Figures inRandthousand Group 2014 Investments inassociates Loans andreceivables Investment securities Investments inassociates Loans andreceivables Investment securities Investments inassociates Loans andreceivables Investment securities MEASURED AT LEVEL3-GROUP RECONCILIATION OFFINANCIAL ASSETS AT FAIR VALUE THROUGH PROFITORLOSS Investments inassociates Investments insubsidiaries Loans andreceivables Investment securities Level 3 Cash andcashequivalents Listed shares Level 1 the inputsusedtomakemeasurements. For financialassetsrecognisedatfairvalue, disclosureisrequiredofafairvaluehierarchy whichreflectsthesignificanceof F Loans andreceivables Current assets Held tomaturity A At fairvaluethroughprofitorloss-designated Non-current assets against athirdparty The impairmentofR61millionagainstinvestmentsincludesR49thatrelatestoanongoing T T Loans toincubatees Loans andreceivables Held tomaturity(impairments) Other financialassets Fixed Held tomaturity Unlisted shares A Listed shares At fairvaluethroughprofitorloss-designated 7. Investments Group 2015 Group 2016

erms andconditions otal otherfinancialassets air valuehierarchyoffinancialassetsatfairthroughprofitorloss vailable-for-sale vailable forsale Term Investments

. This hasbeenreportedtotheFinancialServicesBoard.

224 363 157 435 274 033 122 183 270 735 (61 409) 193 796

Opening 35 252 35 427 balance 26 798 23 500 69 863 20 961 48 902 23 500 21 613 8 454 3 298 8 954 8 454 3 298 8 454 3 298 2016 175 175

profit orloss 210 812 158 272 160 097 304 811 (61 409) 182 737 125 996 127 821 301 274 35 394 35 394 Gains or losses in 23 500 69 766 20 864 48 902 23 500 18 176 (1 063) 23 919 23 919 Opening Opening balance balance 8 357 2 730 8 357 3 537 3 537 9 899 2 305 1 488 8 357 8 357 3 537 Group 2015

- - -

(42 239) 226 100 608 978 (62 746) (44 303) 195 533 606 705 profit orloss profit orloss 34 727 34 727 36 726

23 500 71 700 22 798 48 902 23 500 (1 373) 33 750 21 613 Purchases 8 954 Gains or Gains or losses in losses in 8 954 2 273 2 273 3 437 2 879 8 954 2 273 467 466 2014 97

- - - -

(39 965) (36 334) 148 059 247 000 (61 409) (39 965) (36 334) 116 593 247 000 rentals and collections rentals and Purchases Advances, collections 31 954 31 954 Advances, 23 500 69 863 20 961 48 902 23 500 23 012 8 454 8 454 8 454 428 2016 428

------

aud investigation Company rentals and Disposal of (27 498) 153 391 279 077 collections Disposal of subsidiary Advances, (61 409) (27 498) 122 022 279 077 subsidiary 2015 (1 229) 31 857 31 857 57 099 23 500 69 766 20 864 48 902 23 500 57 099 (1 229) 23 012 8 357 8 357 8 357

------

226 100 160 097 157 435 190 772 470 407

470 (62 746) 195 533 127 821 122 183 158 812 2014 balance balance balance Closing Closing Closing 32 454 32 454 23 500 71 700 22 798 48 902 23 500 21 613 23 919 26 798 23 006 8 954 8 954 8 954 8 357 8 454 8 954 407 ------

117

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 118 Figures inRandthousand Company 2015 Company 2016 Group 2016 Investments insubsidiaries Loans andreceivables Investment securities Investment insecurities Company 2014 Investment insecurities Company 2015 Investment securities RECONCILIATION OF AVAILABLE-FOR-SALE FINANCIAL ASSETS MEASURED AT LEVEL3-COMPANY Investment securities Group 2014 Investment securities Group 2015 Investment securities RECONCILIATION OF AVAILABLE-FOR-SALE FINANCIAL ASSETS MEASURED AT LEVEL3-GROUP Unlisted shares Level 3 the inputsusedtomakemeasurements. For financialassetsrecognisedatfairvalue, disclosureisrequiredofafairvaluehierarchy whichreflectsthesignificanceof FAIROF AVAILABLE-FOR-SALE-FINANCIAL VALUEHIERARCHY ASSETS Investments insubsidiaries Loans andreceivables Investment securities Investments insubsidiaries Loans andreceivables Investment securities MEASURED AT LEVEL3-COMPANY RECONCILIATION OFFINANCIAL ASSETS AT FAIR VALUE THROUGH PROFITORLOSS Company 2014 Company 2016

23 500 23 500 2016

190 772 158 812 23 500 23 006 23 500 Opening balance 8 954 Group 2015

(42 182) 183 488 153 391 (41 119) 150 583 122 022 profit orloss 23 500 (1 063) 23 006 23 012 23 500 Gains or Opening Opening losses in 9 899 8 357 balance balance 2014

(42 350) (22 425) profit orloss profit orloss (41 405) (22 522) Purchases 23 500 Gains or Gains or 23 500 losses in losses in (945) 472 2016 466

6 - - -

Company rentals and rentals and rentals and collections collections collections Advances, Advances, Advances Opening Opening 2015 balance balance 49 634 17 093 23 500 49 634 17 093 23 500 23 500 23 500 23 500 23 500 23 500 23 500 4 329 4 329

------

153 391 190 772 148 059 122 022 158 812 116 593 2014 balance balance balance balance balance Closing Closing Closing Closing Closing 23 500 23 012 23 006 23 012 23 500 23 500 23 500 23 500 23 500 23 500 23 500 8 357 8 954 8 454

Figures inRandthousand Figures inRandthousand Figures inRandthousand Short-term deposits Bank balances Cash onhand other purposes. Cash andcashequivalentsincludeonhand, bankdeposits, investmentsinmoneymarket Cash andcashequivalentsareheldforthepurposeofmeetingshort-term cashcommitmentsrather thanforinvestmentor 11. Cash andcashequivalents Impairment Policy. they vacatetheproperty. The impairmentiscalculatedbasedontheageing ofeachtenantaccountasguidedbytheRental Trade receivablesareimpairedintheeventthat customerhasnotpaidafter120daysandforexrentaltenantswhen Corporation anditssubsidiaries. The tr Impairments Gross receivables T Other receivables V Deposits Prepayments Employee costsinadvance T 10. Trade andother receivables that arebeingfinanced. payments, Cessionoverloanaccounts, shares, businessrightsandanyotherfactorsdependingontheloanproductitems collateral is usually in the form of Personal Surities, Mortgage Bonds, General and Special Notarial Bonds, Cession of Progress advanced areimpairedbasedonthevalueofcollateral thatisavailableasguidedbytheLoansImpairmentPolicy. The Loans advancedareimpairedintheeventthatclienthasnotpaidaninstallmentthreeconsecutiveinstallments Current assets Non-current assets Loans advanced Impairment allowance Loans advanced 9. Loansadvanced asset -duetolosssufferedincurrentperiod Amortisation ofdeferredtax Advanced receipts Prepayments Provision forbaddebts Provision forbonuses Provision forleavepay Finance leaseliability Oper Acceler At beginningoftheyear Reconciliation ofdeferredtaxasset(liability) Deferred tax Deferred tax(liability)asset 8. Deferred tax Figures inRandthousand rade receivables rade receivables AT

ating leaseliability ade receivablesrelatetorentalowedbythetenantsofInvestment propertyownedbytheEasterncapedevelopment ated capitalallowancesfortaxpurposes

(238 712) (220 600)

270 735

249 316 303 143 208 505 10 604 38 852 82 543 82 543 18 242 10 604 36 880 45 663 62 217 8 837 1 107 2016 2016 2016 2016 (73) 180 (63) (33) (16)

(3) (8) 16 13 62

- - - - -

(217 344) (343 953) 101 960 301 274 101 960 319 304 218 285 352 054 25 211 14 848 82 973 15 978 87 112 8 101 1 008 8 101 Group Group Group Group (558) (152) 2015 2015 2015 2015 (16) (19) (94) (18) (18) 800 (16) 16 27 95 36 7 2

(223 305) (329 471) 139 180 606 705 139 180 362 485 387 967 218 734 345 848 16 377 55 880 70 476 33 939 16 377 68 704 5 324 800 218 582 800 186 2014 2014 2014 2014 54 4

------

(220 600) (238 237) 247 000 303 143 196 367 245 091 82 543 34 050 82 543 45 663 50 626 17 485 36 880 6 854 8 681 1 030 6 854 2016 2016 2016 2016

7 ------

Company Company Company (217 344) (341 893) 101 960 279 077 101 960 319 304 203 843 347 502 Company 2015 2015 2015 2015 20 062 14 848 75 230 13 565 87 112 5 609 5 609 888

4 ------

(223 305) (304 856) 139 180 470 407 139 180 362 485 379 883 309 375 2014 2014 2014 2014 19 632 . Loans 70 476 90 520 14 175 68 704 4 519 4 519 186 752 4 ------

119

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 120 position. The ECDC doesnothavespecificassetssetasidetoprefundthisliability. specific paymentsonretirement forthesebenefits. Theliabilitiesoftheseplansarereflected inthestatementoffinancial scheme providesretiredemployees withmedicalbenefits. Intermsoftheplan, theCompanyisliabletoemployees for The Companyoperates a medicalaiddefinedbenefitplanwhichprovidespost-employment medicalbenefits. Themedical 15. Retirement benefitobligation At amortisationcost Current liabilities At amortisedcost Non-current liabilities T Interest r Motor vehiclefinance Industrial DevelopmentCorpor Development BankofSouthern Held atamortisedcost 14. Interest borrowings Acquisition ofOceanwise Reversal ofreserves(refertonote37) F Property revaluationreserve(PPE) Pre-incorpor earnings. Fair valuereservescompriseallfairadjustmentsthatarerecogniseddirectlyinequityand /ortransfers fromretained FAIR VALUE ADJUSTMENTAVAILABLE-FOR-SALE-ASSETSRESERVE These reservesrelatetoallfairvalueadjusmentsonofficebuildingsthataredirectlyrecognisedinequity. PROPERTY, PLANT AND EQUIPMENTREVALUATION RESERVE that refertothevalueofassetstakenover. for anychangesinthevalueoftheseassetsduetoinformationwhichhasbeenestablishedduringcurrentandprioryears Pre-incorporation reserves represent the net book value of asset and liabilities transferred from previous corporations, adjusted PRE-INCORPORATION RESERVES 13. Reserves Reported asat01 Issued entitle ittoamajorityvote. Noshareswereissuedduringtheyear. All sharesissuedarenottr “B” “ Issued 50 billionOrdinary Type Bsharesof1centeach 50 billionOrdinary Authorised 12. Share capital Figures inRandthousand Figures inRandthousand Figures inRandthousand A” sharesof1centeach erms andconditions air valueadjustmentonavailable-for-sale reserve sharesof1centeach

ate swaps ation reserve

Type A sharesof1centeach

April 2015

ansferable otherwisethanbyan Act ofProvincialParliament. The shares heldbytheStateshall ation ofSouth Africa Ltd

Africa

1 000

427 590 410 540 5 5 427 590 213 795 213 795 384 265 00 000 00 000 00

22 680 3 595 2016 2016 2016 235 235 235

------

1 000 427 590 427 949 427 590 213 795 213 795 5 5 384 265 24 382 00 000 00 000 00 23 875 2 17 409 22 680 3 664 3 3 595 Group Group Group 2015 2015 2015 507 705 13

- -

1 000 427 590 415 709 427 590 213 795 213 795 5 5 392 571 00 000 00 000 00 22 680 10 211 (9 753) 1 171 1 171 273 898 2014 2014 2014 - - - -

1 000 427 590 410 540 427 590 213 795 213 795 5 5 384 265 00 000 00 000 00 22 680 3 595 235 2016 2016 2016 235 235 ------

1 000 427 590 410 540 427 590 213 795 213 795 5 5 384 265 Company Company Company 2015 2015 2015 00 000 00 000 00 22 680 3 595 705 507 198 705

- - - - -

1 000 427 590 407 403 427 590 213 795 213 795 5 5 2014 2014 2014 384 265 00 000 00 000 00 22 680 1 171 1 171 273 898 458 - - - -

Post retirementobligationatend Actuarial gans/losses Expected benefitpayments Service cost Interest cost Post retirementobligationatstart Five yearforecast PA(90)-1 -referstostandardactuarialmortalitytablesforcurrentandprospectivepensionersrated downbyoneyear SAB85-90(Light) - This isatable thatreflectsthemortalityexperienceinSouth Africa. SAB85-90(Light)-3 - Retirement age Post-expected retirementmortality Pre-expected retirementmortality Mortality Rate accumulated benefitobligation 1% decrease-effecton service cost&interest 1% decrease-effectoncurrent accumulated benefitobligation 1% increase-effecton service cost&interest It Effect of1%changeinassumedmedicalcosttrendrates Interest cost Service cost Expected futureexpenditure CA Active members Present valueofaccruedliability Discount r Health carecostinflation P Actuarial gains(losses) Interest Current servicecost Net expenserecognisedintheincomestatement Net expenserecognisedinprofitorloss Contributions bymembers Opening balance Changes inpresentvalue Actuarial (loss)gain Contributions Interest Current servicecost Balance atbeginningoftheperiod 1% increase-effectoncurrent • Resignationrate • Mortality • Healthcarecostinflation performed at31March2016assumptionsusedinthesensitivityanalysisareonepercentagevariationin: Figures inRandthousand

ast (accrued)andfutureserviceliability is the policy of the Corporation to provideretirement medical benefits to allitsemployees. Based onthe actuarial valuation WMs liability

ate used

This isatablethatreflectsthemortalityexperienceinSouth Africa rated downbythree years forfemales.

(35 691) (35 691) (32 389) (32 389) (3 920) 35 691 35 691 26 765 32 389 (2 828) (2 775) (4 890) (2 828) (2 775) (3 920) (1 683) 8,93 % 7,43 % 5 505 8 926 1 683 1 683 2 775 2 828 6 067 3 580 1 925

2016 2016 (618) (427) 618 618 541

(32 389) (32 389) (28 808) (28 808) (3 979) 32 389 40 523 23 266 35 691 (2 729) (3 979) (2 729) (4 264) 8,73 % 7,87 % 6 255 9 123 1 925 3 580 5 301 3 238 3 017 Group 2017 2015 (548) (702) (548) (702) (673) (465) 398 398 586

SAB85-90 P (Light) -3 A(90) -1 (28 808) (28 808) 60 years (27 830) (27 830) (1 268) 28 808 46 162 22 329 40 523 (2 079) (1 268) (2 079) (4 366) 9,36 % 8,16 % 3 431 6 479 1 605 1 605 2 307 4 064 5 460 2 729 2018 (794) (794) (732) (471) 290 290 607 702 2014 -

SAB85-90 P A(90) -1 (35 691) (35 691) 60 years (32 389) (32 389) (3 920) 35 691 52 493 26 765 46 162 (2 828) (2 775) (3 920) (2 828) (2 775) (4 890) 8,93 % 7,43 % (Light) 5 505 8 926 1 683 1 683 2 591 4 630 6 067 3 580 1 925 2019 (890) (427) 2016 618 618 541 -

SAB85-90 P (Light) -3 A(90) -1 (32 389) (32 389) 60 years (28 808) (28 808) Company 2015 (3 979) 32 389 59 691 23 266 52 493 (2 729) (3 979) (2 729) (1 047) (4 264) 8,73 % 7,87 % 6 255 9 123 2 980 5 265 5 301 3 238 3 017 2020 (548) (702) (548) (702) (465)

398 398 586 -

SAB85-90 P A(90) -1 (28 808) (28 808) 60 years 2014 (27 830) (27 830) (1 268) 28 808 67 880 22 329 59 691 (2 079) (1 268) (2 079) (1 211) (4 366) 9,36 % 8,16 % (Light) 3 431 6 479 1 605 1 605 5 987 5 460 2 729 3 413 2021 (794) (794) (471) 290 290 607 702 -

121

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 122

• Contr Equipment • Contr Premises Operating leasecharges Operating lossfortheyearisstatedafteraccountingfollowing: 20. Operatingloss Interest onRent Interest receivedonloans Rental Income Rendering ofservices Sale ofgoods 19. Revenue Government gr There arenounfulfilledconditionsorcontingenciesattachedtothesegrants. in thelevelofGovernmentgrants grants receivedarerecognisedintheStatementofFinancial Performance. The ECDCdoesnotexpectasignificantdecrease achieve themandateanditsobjectivestargetssetperCorporate Plan. The extenttowhichthesettargetsaremet, the The EasternCapeDevelopmentCorporation receivesgrant fundingfromtheProvincialGovernmentofEasternCapeto 18. Governmentgrants Other payables Deposits received Other accruedexpenses Accrued bonus Accrued leavepay Government funds V Amounts receivedinadvance T 17. Trade andother payables conditional governmentgrants atyearend. projects butnotyetspentasat31Marchareclassifieddeferredincome. Therewerenounfulfilledconditions relatingtothe for theimplementationofvariousprojectsonbehalfothergovernmententities. Fundsthathavebeenreceivedforthese Government gr EL IDZ Automotive IndustrialDevelopmentCentre Eastern CapeDevelopmentCorpor Analysis pergroupcompany Current liabilities Non-current liabilities 16. Deferred income

Figures inRandthousand Figures inRandthousand Figures inRandthousand Figures inRandthousand Figures inRandthousand rade payables AT

actual amounts actual amounts

ants aredeferredtotheextentthattheyun-spent. The EasternCape DevelopmentCorporation isresponsible

ants

ation

140 370 140 370 139 991 127 438 72 402 57 371 12 932 1 335 7 260 3 448 2 960 2016 2016 379

24 4

- - -

111 321 111 321 101 960 110 817 91 299 13 399 56 481 1 536 8 016 3 661 7 896 9 361 Group Group 2015 2015 310 504

- - -

1 920286 1 920286 1 686683 1 546683 137 950 202 735 231 325 373 603 175 270 119 470 14 513 19 374 38 291 22 490 22 987 83 925

6 102 2 194 6 726 2 278 5 758 8 516 2 006 161 344 Group Group Group 2016 2014 2014 2016 2016 32 -

127 438 127 438 131 849 127 438 127 438 235 681 71 470 20 479 22 458 77 345 56 810 5 528 1 335 7 117 3 448 2 760 5 229 8 042 3 525 2015 2016 2016 2015 2015 299 ------

101 960 101 960 123 918 101 960 101 960 150 335 Company Company 2016 2015 2015 2016 2016 75 549 22 490 22 987 75 181 52 093 4 797 1 536 7 792 3 661 7 400 3 067 4 453 3 260

344 Company

Company Company ------

231 325 231 325 117 325 132 133 231 325 231 325 171 763 2015 2014 2014 2015 2015 18 745 20 479 22 458 71 558 99 593 4 340 1 546 9 133 3 116 4 052 2 830 288 ------Prior year’ Exempt income De-recognition ofdeferredtax Unrecognised tempor T T Accounting profit Reconciliation betweenaccountingprofitandtaxexpense Reconciliation ofthetaxexpense Deferred tax Deferred Local incometax-recognisedincurrentforpriorperiods Current Major componentsofthetax(income)expense 25. Taxation Interest oninterestbearingborrowings Bank Non-current borrowings 24. Financecosts Other financialassets Investment property 23. Fair valueadjustmentsthrough profit or loss Current accounts Subsidiaries Interest revenue Listed financialassets-Local Dividend income 22. Investmentrevenue Fees 21. Auditors’remuneration Direct propertyoper Employee costs Depreciation onproperty Amortisation onintangibleassets Reversal ofimpairmentontr Impairment onrentdebtors Impairment ofloansadvanced Impairment onloanstogroupcompanies Reversal ofimpairmentoninvestments Rental debtorswrittenoff Loans baddebtswrittenoff Loss onsaleofinvestments Loss onsaleofinvestmentproperty Loss onsaleofproperty, plantandequipment Figures inRandthousand Figures inRandthousand ax attheapplicabletaxrate of28%(2015: 28%) ax effectofadjustmentsontaxable income

s under-provision

ating expenditure

ary differences

, plantandequipment

ade andotherreceivables

(138 911) 177 834 123 076 138 911 (29 279) 104 568 178 073 10 002 79 533 35 255 13 762 28 203 9 901 4 195 1 975 3 346 3 706 4 025 1 060 9 901 (239) (16) (16) 133 101 265 (16) 133 Group Group 2016 2016 20 ------

164 536 120 636 100 782 163 272 10 142 10 051 73 698 14 482 47 261 (1 337) 39 710 (7 000) 10 051 4 011 6 543 1 264

824 824 738 2015 2015 189 663 599 216 816 647 91 10 88 9 8 3 ------

(138 911) 171 773 110 463 138 911 171 773 2016 2016 10 890 10 890 79 533 35 255 98 786 3 935 1 643 3 346 2 985 3 706 4 025 8 916 1 974

123 123 Company Company

96 15 ------

149 572 105 503 149 572 2015 2015 10 949 10 949 73 698 37 037 47 261 (1 337) 39 710 (7 000) 68 796 3 840 5 517 9 251 1 698 695 74 74 81 10 ------

123

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 124 note above. The GrouphasexposuretolitigationofR14.7million CONTINGENT LIABILITIES 28. Contingencies The Prior yearunder Closing balance Balance atbeginningoftheyear 27. Tax paid Deferred income T T Changes inworkingcapital: Other investmentswrittenoff Inter Loans writtenoff Movements inretirementbenefitassetsandliabilities Impairments F Finance costs Interest income Dividends received Income fromequityaccountedinvestments Amortisation ofintangibleassets Loss onsaleofproperty Loss (profit)onsaleofassets Depreciation ofproperty Adjustments for Profit beforetaxation 26. Cash(usedin)generatedfrom operations Figures inRandthousand been set. Status ofmatter: Summons issuedagainstECDCon9thSeptember2014, thematterisstillpendingandnotrialdate has Approximate liability: R5,890 5. Claimfordamages- Tabile Jodwana Status ofthematter: The matterispending and notrialdatehasbeenset. Approximate liability: 4. the ECDCappointedSheriffduringanexecutionofevictionorder. The matterispendingawaitingatrialdate. Status of matter: Summons issued against ECDC on 4th April 2014. This claim is for damages to a property allegedly caused by Approximate liability: R371, 855 3. Claimfordamages-Madodebhunga Nkubungu amount disclosedinthepreviousyearwasincorrectduetoatyping error. ithasnowbeencorrected Status ofmatter: The matterwasarguedbeforeJudge on12May2016, judgementhasbeenreserved. Pleasenotethatthe Approximate potentialliability: R561,088 2 . thematter. Status ofmatter: The summonswasissuedtoECDCon19 April 2016. The ECDChassincefiledaNoticeofintentiontodefend Approximate potentialliability: R2,171,044.50 1. Claimbyemployeeforpaymentofdamages 2016 EASTERNCAPEDEVELOPMENTCORPORA Matters underconsideration: rade andotherpayables rade andotherreceivables air valueadjustments . Claimforpaymentdamages-RemDevelopment(Pty)Ltdt/a PhambiliPropertyDevelopmentsandfourOthers Claimforpaymentofdamages–171CapeRoad Trust comparative figures were incorrect as disclosed in the prior year Financial Statements and have been corrected in this -company loanswrittenoff

-provision

R3,122,109

, plant&equipment , plant&equipment

TION

(2015:R10.3million) againstit,astabulatedbelow

(177 834) (73 895) (67 589) (32 887) 104 568 29 049 (9 849) 69 193 (2 879) 3 227 3 302 4 025 2 983 (101) 479 133 265 (85) Group 2016 20 85 - - -

(231 396) (122 281) (164 536) (61 544) (19 289) (32 509) 100 782 37 310 22 927 (2 305) (4 431) 2 400 3 581 7 569 (124) 2015 738 (91) 273 (85) (31) 10 (8) -

(171 773) (87 912) (78 312) (31 903) 2016 25 478 (4 077) 60 979 98 786 3 227 3 302 4 025 1 643

479 123 Company

96 15 ------

(250 623) (124 365) (149 572) (56 585) (47 907) (31 709) 2015 37 310 46 177 (4 431) 68 796 2 400 3 581 5 517 74 81 10 ------

- laterthanfiveyears - insecondtofifthyearinclusive - withinoneyear Minimum leasepaymentsdue Operating leases–aslessor(income) - insecondtofifthyearinclusive - withinoneyear Minimum leasepaymentsdue Operating leases–aslessee(expense) • Projectfundsordersnotyetpaid Already contractedforbutnotprovided Authorised capitalexpenditure 29. Commitments 2015. 15 April matter of Status Approximate liability: R2,565,037 8. Claimfordamages eviction order. The matterisstillpending. Status ofmatter: This matteremanatesfromallegedwrongfulevictionanddamagessufferedduringanexecutionof Approximate liability: R452,037 7. Summons issuedagainsttheECDCon18November2014, thematterisstillpending. Status ofmatter: This matteremanatesfromallegeddamageandtheftofpropertyduringanexecutioneviction order. Aproximate liability: 6. Status ofmatter: SummonsissuedagainstECDCon9thofSeptember2014, thematterisstillpending. Approximate liability: R5,890 5. Claimfordamages- Tabile Jobodwana Status ofmatter: The ECDCisengagingtheclaimanttopursueanoutofcourtsettlement. Approximate liability: R325,395 4. Claimforprofessionalfees-DrMnyande by theECDCappointedSheriffduringanexecutionofevictionorder. Status ofthematter: SummonsissuedagainstECDCon4th April 2014. This claimisfordamagestoapropertyallegedlycaused Approximate liability: R371,855 3. Claimfordamages-MadodebhungaNkubungu for trialon20November2015 Status ofmatter: ECDCreceivedsummonsonthe8thMay2013. ECDCwillbedefendingthematter. This matterissetdown Approximate potentialliability: R561, 088 2. Status ofmatter: The matterwasarguedbeforetheCourton28January 2015andjudgementwasreserveduntilfurthernotice. Approximate potentialliability: 1. 2015 EASTERNCAPEDEVELOPMENTCORPORATION filed on15 April2015.Thematterisstillpendingandnotrialdatehasbeenset. Status ofthematter. SummonshavebeenissuedagainsttheECDCandaNoticeofintentiontodefendhasserved Approximate liability: R2,565,006 8. Claimforpaymentofdamages- Telesure Group eviction oder. The matterisstillpendingandnotrialdatehasbeenset. Status ofmatter. This matteremanatesfromallegedwrongfulevictionanddamagessufferedduringanexecutionof Approximate liability: R377,037.06 7. Summons issuedagainstECDCon18thNovember2014, thematterisheldinabeyance. Status ofmatter: This matteremanatesfromallegeddamageandtheftofpropertyduringanexecutionevictionorder. Approximate liability: 6. Figures inRandthousand Claimforwrongfulevictionanddamages-MbonaBusiness Claimforreplacementofproperty-ButterworthBakeryCC Claim forcancellationoflease–171CapeRoad Claimforoutstandingemployeetransfercostsandshortpaymentofperformancebonuses Claimforwrongfulevictionanddamages-MbonaBusiness Claim forreplacementofproperty-ButterworthBakeryCC : Summons have been issued against the ECDC and Notice of intention to defend has been served and filed on

R5,512,975

R508,478

Trust

Trust Trust

113 012 88 249 42 957 36 924 8 232 8 368 2 545 5 687 Group 2016

68 184 12 660 32 221 27 933 37 158 8 030 7 234 5 426 2015

113 012 2016 88 249 42 957 36 924 6 787 8 368 2 358 4 429

Company

2015 68 184 10 452 32 221 27 933 37 158 8 030 6 215 4 237 125

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 126 Eastern CapeLiquorBoard Eastern Rent receivedfromrelatedparties Eastern CapeInformation Oper Oceanwise (Pty)Ltd Silvermoon investments183CC Ndlambe Natur Border Copiers(Proprietory)Ltd Interest receivedfromrelatedparties Management fees Rent paidtosubsidiaries Government gr Interest fromsubsidiaries Subsidiaries andassociates Figures inRandthousand RELATEDPARTY TRANSACTIONS Bio CoalManufacturersandDistributers(Pty)Ltd Ndlambe Natur Singisi F Silvermoon investments183CC Crossmed HealthCare(pty)Ltd Oceanwise (Pty)Ltd Digitisation &remanufacturinginstituteofSouth Magwa Automotive IndustryDevelopmentCentre-EasternCape Border copiers Related party:2015 Ndlambe Natur Singisi F Silver MoonInvestments183CC Crossmed HealthCare(Pty)Ltd Oceanwise (Pty)Ltd Digitisation &RemanufacturingInstituteofSouth Bio CoalManufaturersanddistributers(Pty)Ltd Magwa Automotive IndustryDevelopmentCentre-EaternCape Border Copiers Related party:2016 or aspartofitsinvestmentstrategy. Outstandingbalanceswiththeseentitieswereasfollows: The Corporation acquiresequityinvestmentsincertainentities towhichithasadvancedloanfundsassecurityfortheseloans OTHER RELATED PARTIES Related party balances with subsidiaries and associates are disclosed in Note 6: Loans to / (from) subsidiaries and associates. SUBSIDIARIES ANDASSOCIATES Middle management ECDC executivemanagement (T Amounts includedin Trade andotherreceivable Figures inRandthousand RELATED PARTY BALANCES K Directors Shareholder Relationships 30. Relatedparties ey managementandotherseniormanagers rade andotherPayable) regardingrelatedparties ational expenditurepaidonbehalf of Tea Enterprise(Pty)LTD Tea Enterprise(Proprietory)Ltd orest Products orest Products Cape AppropriateTechnologyunit

ants paidto Automotive IndustryDevelopmentCentre(AIDC) al IndustrialProducts(Proprietory)Ltd al IndustrialProducts(Pty)Ltd al IndustrialProducts(Proprietory)Ltd

Technology Initiative

Africa (DRISA) Africa (DRISA)

J Manilal(ChiefExecutiveOfficer) AIDC DevelopmentCentreEasternCape(Proprietary)Limited B Melitafa(Executive: J Cerff(Executive: N Dlulane(ChiefExecutiveOfficer) S Sentwa(ChiefFinancialOfficer) N Ngewu(Executive: M Lindie(ChiefEconomist) D Mandell(ActingExecutiveManager Eastern CapeDevelopmentCorpor Refer totheDirector’ Environmental Affairs Department ofEconomicDevelopmentand

Infrastructure development)

Corporate Services) 2 316 s report ISIDP) and Tourism(DEDEAT) 125 386 2016 2016 (5) 47

------

ordinary shares Preference/ 3 256 3 256 ation 2 632 1 108 1 108 2015 2015 308 100 820 300 100 100 676 100 820 300 100 100 676 : Development 46 30 22 22 30 ------

balance Loan 2016 2016 41 951 43 768 15 286 13 761 2 316 1 364 1 285 2 664 1 974 4 958 5 319 3 245 3 503 9 348 3 762 5 584 2 000 4 232 5 033 3 503 3 762 5 689 5 584 2 000 4 436 Investments) 125 386 415 413

(5) 47

- - - -

Accumulated impairment 2015 2015 34 686 32 784 19 504 13 761 2 632 1 187 2 275 1 698 4 958 5 319 3 245 9 348 5 584 2 000 4 232 1 062 5 689 5 584 2 000 4 436 308 598 262 368 367 252

46 ------

2015 2016

shareholders value. ECDC tolerates risksas describedbyperformanceindicators, operational parameters andprocesscontrolstoincrease The boardofdirectorshasapproved ariskappetiteandtolerance framework which formsthebasisofextenttowhich RISK APPETITE The businessmodelstrivestomaximise financialanddevelopmentreturnswhilemaintaining acceptableriskprofile. The objectiveofERMistocontinuouslyprovideandupdateriskidentification, validation, managementandreviewoftheserisks. all linesofbusiness), comprehensive(coveringalltypesofrisk)andstrategic (alignedwiththeoverall businessstrategy). ERM isconsideredfromanenterprisewideportfolioperspective satisfyingthreerequirements, namelyintegration (spanning and reviewedonaregularbasis. ECDC hasestablishedanERMframework thatisshareholdervaluebased, organisationally embedded, supportedandassured, ENTERPRISE RISKMANAGEMENT (ERM) changes rather thanwaitingforthechangeandreacttoit. underscores thefactthat the survival of anorganisation depends heavily onitscapabilities to anticipateandprepareforthe The essentialfunctionofriskmanagementistoidentifymeasure andmonitortheriskprofileofECDC. Riskmanagement INTRODUCTION 32. Riskmanagement Infr Mr JCerff(Executivemanager Mr MLindie(Chiefeconomist) - Integr Mr GCowley(Executivemanager - Terminated31/01/2015 - Appointed Mrs N Corpor Mrs NNgewu(Executivemanger Mr SSentwa(Chieffinancialofficer) Investments andFunding) Mr NDlulane(Executivemanager - T Mr RNaidoo(ActingCEO) - T Mr SMase(CEO) Mr BMelitafa(Executivemanager Mr SSetntwa(Chieffinancialofficer) Ms N Ms NNcokazi(Gener Mr DMandel(ActingExecutivemanager Mr JCerff(Executivemanager Mrs NNgewu(Executivemanager Mr MLindie(ChiefEconomist) Mr NDlulane(CEO)started01/12/2015 COMPENSATION TO EXECUTIVEMANAGEMENT 2015 2016 NON-EXECUTIVE 31. Director’s andprescribed officer’s emoluments

T erminated 19/12/2014 erminated 02/05/2014 erminated astructure

Tsipa (General manager: Operations) ated SocialInfrastructure Programme)

Van Dyk(ActingCFO) ate Services) 05/09/2014 31/01/2015 development)

al Manager: Innovationandproductdevelopment)

: Infrastructure development) :

: :

: ISIDP)started01/05/2015

: Corporate services)

: DevelopmentInvestments Director’ Director’

5 638698 947 347 693 041 547 555 155 446 705 660 824 161 804 232 788 806 172 450 Emoluments s fees s fees 2 109 1 526

3 850148

468 659 709 817 561 046 214 437 312 999 572 113 475 422 528 009 Allowances

7 646 1 526 2 109 T T otal otal

826 157 102 545 155 902 170 647 122 966 169 473 contribution to 20 977 68 248 15 399 Employer funds

12 689278

1 311255 1 430098 1 097564 1 305188 1 065124 1 744994 1 439798 1 401857 1 893400

348 175 233 034 91 521 23 620 Leave pay earnings T otal ------

contribution tofunds 1 282694 2 199360 2 199360 T 152 364 127 152 155 902 141 685 150 552 166 775 178 084 210 180 ermination Employer pay -

------

13 971972 12 862538 1 451531 2 633467 1 463619 1 557250 1 253466 1 446873 1 215676 1 744994 1 606573 1 579941 2 103580 1 657164 1 409989 1 448420 1 422549 1 501714 853 860 483 844 T T otal otal

127

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 128 instruments exposed tointerestrate risk wereinterest-bearingborrowings, heldtomaturity investmentsandloansadvanced. investments arealsomadeinline withBoardpolicyandwouldbelessprofitableasinterest rates drop. Atyearend, financial The cashresourcesofthegroup areinvestedmainlywithlargemoneymarketfundsandSouth African banks. Development ECDC andthegroupareexposed tointerestrate riskarisingmainly fromexposuretotheInvestmentinDevelopmentLoans. loss andtoensuretheadequacy ofthecompensationreceivedforrisktakenandeffect return trade-off. The objective of interest rate risk management is to maintain earnings, improve the capability and ability to absorb potential sheet itemsandcashflow. condition tothemovementininterestrates. Changes ininterestrates affectsearnings, valueofassets, liabilityoff-balance Interest rate riskisthepotentialnegativeimpactonNetInterestIncomeanditreferstovulnerability ofECDC’s financial FINANCIAL: INTERESTRATE RISK sheet positionswhichwillbeadverselyaffectedbymovementsin interestrate markets. Market RiskisdefinedasthepossibilityoflosstoECDCcaused by thechangesinmarketvariablesofbothonandoffbalance FINANCIAL: MARKETRISK 8. 7. 6. 5. 4. 3. 2. 1. ECDC’s approachtocreditriskmanagementisto: by therecoveriesthatcouldbemadeineventofdefault. the date of default and the quality of risk measured as the severity of loss defined by both the probability of default as reduced Credit riskconsistsoftwocomponentsnamelythequantitymeasuredasoutstandingaccountsreceivablebalancesat dominant riskwithinECDCastheprovidingofloans, equitycapitalandrentalaccommodationisthecorebusinessofECDC. inherent tothebusinessoflendingfundsandrentalcollectionsiscloselylinkedmarketriskvariables. Creditriskisa Credit riskisthepotentialthataborrowerorcounterpartyfailstomeettheirobligationsasperagreedterms. Creditriskis FINANCIAL RISK: CREDITRISK funding structureandasaresultofitsexternalinvestmentfinancingactivities. Financial risksincludescredit, interestandmarketrisk. These riskstrytominimiselosseswhichmayresultdueECDC’s own FINANCIAL RISK levels forthevariousCommitteesandstaffwhoapprovescreditassetsliabilitydecisions. practises and controls applied within ECDC on a day to day basis and by determining and reviewing of the maximum mandate should beaccepted, mitigatedoravoided, prioritisingriskidentification, evaluatingtheefficiencyofriskpolicies, procedures, ECDC managesstrategic risksbytheannualreviewofriskappetiteandtolerance framework, establishing whether risks economic conditions, reputationalrisksandtheavailabilityofcapital. Strategic risks include the failure of ECDC to fulfil onits development role interms of shareholders expectation, macro STRATEGIC RISK 8. 7. 6. 5. 4. 3. 2. 1. The riskdepartmentactivelymonitorsandoverseekeyrisksoftheCorporation. The keyrolesandresponsibilitiesoftheunitareto: RISK MANAGEMENT DEPARTMENT Compliance andInformation Technology Governance The keyriskshavebeenclassifiedaccordingtothefivebroadriskcategoriesnamely, Strategic, Financial, Operational, appetite andtodevelopaculturewheremanagementisawareoftheriskstaken. Risk tolerance levelsassistsmanagementtomakebetterinformedbusinessdecisions, focusonrisksthatexceedstherisk

Regularly reporttomanagementontherisksidentified and procedureshavebeenestablished. provisions, adherencetolendingpoliciesandproceduresproposemitigationactionswhereweaknessesinsystems Provide and toreducetheimpactofconcentr Maximise portfoliomanagementwhichemanatesfromthenecessitytooptimisebenefitsassociatedwithdiversification Price loansaccordingtotheseverityofperceivedcreditrisk; T Oper meets thebasiccriteriaforfunding/occupation; Perform duediligenceandinvestmentscreeningonallnewloanrentalapplicationstoestablishifthe Establish exposureceilings(limits)incertaincategoriesofloanswithinaamountr Benchmarking ofbestpr Concentr Providing independentinvestmentanalysisforallinvestmentsproposalsformallyandinformally; Advising Str Assisting inrefiningtheriskappetiteandaligningittoECDCmandate risk managementpolicyguidelines. Board oncriticalissuesidentified, ontheprogressinmitigatingrisksandanyfundamentalbreachesofapproved Regularly reportingtotheChiefRiskOfficer Developing corpor Play anactiveroleininstitutingandpromotingasustainablerobustERMprocess; est theuseofariskrating modelforsmallandmediumbusinessesimplementationduring2013; ate amulti-tiercreditapprovingauthoritybasedontheloanamount; a loan review mechanismto identify loans with credit weaknesses and determine the adequacy of loan impairment ation identificationandanalysis; ategic Businessunitsonmitigatingcontrols, processesandprocedures; ate-wide monitoring, assurance andreportingprocessesforriskmanagement; actice riskmanagementactivitiesandapplicationthereofwhereapplicable. ation ofexposurestoacertainindividual, sectororindustry. , ExecutiveManagementandtheBoard Audit andRiskCommitteethe

, corporate andoperational targets

ange;

As at31March2016 Liquidity gap Finance leaseobligation T Interest bearingborrowings Liabilities Cash andcashequivalents Loans advanced T Investments Assets As at31March2015 Liquidity gap Finance leaseobligation T Interest bearingborrowings Liabilities Cash andcashequivalents Loans advanced T Investments Assets LIQUIDITY RISKEXPOSURE as havingthehighestimpactonECDCbusinessoperations andisbeingmanaged. Information Security, InternetandE-mailPolicywhichgovernsallaccesstoinformation. Disasterrecoveryhasbeenidentified management, informationmanagement and businesscontinuitymanagement. This Charterisfurtherstrengthened by an which aligns the technical strategy and business needs in by delivering value, managing performance; caters for security IT riskismanaged by keepinguptodatewiththelatest advances intechnology and interms of anapprovedITCharter are benchmarkedagainstbestpractice and accordingtoCOBITstandardwhereapplicable. technology leadandmanagingourcosts. Itisalsofullyintegrated intoourstrategic andbusinessprocesses. All ITdecisions Technology iscoretoECDC’s business. Technology governanceisvitaltostrikingtherightbalancebetweenholdingonour INFORMATIONRISK TECHNOLOGY ECDC isnotrequiredtoholdanycapitalintermsoftheBank Act 94of1990andmaygearupto100%theavailablecapital. A shareholders compact entered into between the parties manages the performance as well as ECDC capital management. sole shareholdertheDepartmentofEconomicDevelopment, Environmental Affairs and Tourism ECDC isregulatedthroughtheEasternCapeDevelopmentCorporation Act 2of1997asamended. ECDCisaccountabletoits COMPLIANCE RISK • • • • • • Operational riskisalsomitigatedthrough: reported byeachBusinessUnitManager. ensure thatoperational risksareconsistentlyandcomprehensivelyidentified, assessed, mitigated, controlled, monitoredand In ordertomitigatetheabove, anoperational riskframework andrisksregistershavebeendevelopedperbusinessunitto excludes systemicandreputationalrisk. inadequate orfailedinternalprocesses, peopleandsystemsorfromexternalevents. This definitionincludeslegalriskbut Operational risks, thoughdefinedasanyriskthatisnotcategorisedmarketorcreditrisk, istheriskoflossarisingfrom OPERATIONAL RISK reported toExecutiveManagementonamonthlybasis. of moneymarketinstrumentssuchascalldepositsandbonds. The monthlymanagementoftherequiredliquiditylevelsis The ECDCInvestmentPolicygovernstheliquidityrequirementsperinvestmenttype. Liquidityisheldprimarilyintheform and investorsoperational expenditure. costs. This risks specifically arises from the inability to honour obligations with respect to commitments to borrowers, lenders Liquidity riskisdefinedastheoffailuretomeetallfinancialobligationsonatimelybasis, withoutincurringabovenormal LIQUIDITY RISK rade andotherpayables rade andotherreceivables rade andotherpayables rade andotherreceivables

Performing fr Commitment ofemployeestoacodeconductthatencour Insur Recruitment policies Business Continuityanddisasterrecoveryplanswhicharebeingmanagedthrough The performanceofregularinternalaudits

ance throughpublicliabilityandinsurance offixedassets

aud awarenesstraining andtheavailabilityofafraud reportinghotline

ages integrity, professionalism, accountabilityandteamwork

279 077 279 077 247 000 247 000 279 077 247 000 On demand one month and less ------

VMWARE virtualizationplatform

107 174 1 to12months (1 283) 30 611 76 563 72 213 70 930 75 548 87 112 20 062 71 470 36 880 34 050 508 507 508 235 - - - - -

More than 12 months 45 999 46 705 77 617 77 617 14 848 31 857 45 663 31 954 706 508 198

------

355 687 432 956 323 334 395 547 279 077 101 960 247 000 T 77 269 72 213 otal 75 548 20 062 31 857 71 470 82 543 34 050 31 954 1 016 705 508 235 - 129

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 130 T Loan advances Company T Loan advances Group The ageingoftheseclassesareasfollows: impaired andprovidedfor. As at31March2016, theGrouphadLoanadvancesand Trade receivables ofR459211(Company: R458837)whichwere * -Excludesprepaymentsand Maximum exposure Cash andcashequivalents Investment inassociate Investments T Loans advanced maximum exposuretocreditriskasatreportingdatewas: The carrying amount of the assets as at the balance sheet date best represents the maximum exposure to credit risk. The CREDIT RISK is performedonthesamebasisforprioryears. but oppositeeffecttotheamounts shown above. This analysisassumes that allothervariablesremainconstant. The analysis for 12months, wouldhaveincreasedprofitbytheamountshowabove. Adecreaseof100basispointswould havehadequal An increaseof100basispoints Financial liabilities Financial assets CASHFLOW SENSITIVITY ANALYSIS FOR VARIABLE RATE INSTRUMENTS Financial liabilities Financial assets Development investmentsarealsomadeinlinewithBoardpolicyandwouldbelessprofitableasinterest rates drop. The cashresourcesofthegroupareinvestedmainlywithlargemoneymarketfundsandSouth African banks. monitors andensuresthattheinterestrate riskprofilesareinlinewithlimitsandbenchmarksstipulatedthepolicy. The interest rate risk is managed in terms of the Board approved investment and development investment policies. The Group • Investmentofsurplusoperational cash. • Investmentindevelopmentloans. The Group’s exposuretointerestrate riskarisesfromprimarilythefollowing: INTEREST RATE RISK Profit orlossonsensitivity V

rade receivables rade receivables rade andotherreceivables* ariable rateinstruments

VAT receivables. in interest rates atreporting date, calculated ontheclosingbalances and using simple interest 444 236 353 022 270 735 353 257 26 798 35 252 28 908 82 543 3 530 3 532 (235) 2016 2016 2016

(2)

378 848 486 723 (24 382) 403 230 301 274 101 960 23 919 35 394 24 176 3 788 4 032 Group Group Group (244) 2015 2015 2015

743 495 852 595 744 666 606 705 139 180 (1 171) 21 613 34 727 50 370 7 435 7 447 30 days (12) 2014 2014 2014 ------

329 218 385 836 329 453 247 000 31 954 24 339 82 543 3 293 3 295 60 days (235) 2016 2016 2016 (2) ------

458 837 459 211 238 237 220 600 238 611 220 600 >90 days 380 332 432 068 381 037 279 077 101 960 Company Company Company 2015 2015 2015 31 857 19 174 3 803 3 810 (705)

(7)

608 416 458 837 459 211 660 735 609 587 238 237 220 600 238 611 220 600 470 407 139 180 T 2014 2014 2014 otal (1 171) 32 454 18 694 6 074 6 086 (12) - Group 2016 Group 2016

Finance leaseobligation T Interest bearingborrowings Group 2014 Oper Loans fromShareholders Finance leaseobligation T Interest bearingborrowings Group 2015 Oper Finance leaseobligation T Interest bearingborrowings The accountingpoliciesforconsolidatedannualfinancialinstruments havebeenappliedtothelineitemsbelow: 34. Financialliabilitiesbycategory Cash andcashequivalents Investments insubsidiaries Loans togroupcompanies T Loans advanced Investments Company 2014 Cash andcashequivalents Investments insubsidiaries Loans togroupcompanies T Loans advanced Investments Company 2015 Cash andcashequivalents Investments insubsidiaries Loans togroupcompanies T Loans advanced Investments Company 2016 Cash andcashequivalents Investments inassociates T Loans advanced Investments Group 2014 Cash andcashequivalents Investments inassociates T Loans advanced Investments Group 2015 Cash andcashequivalents Investments inassociates T Loans advanced Investments The accountingpoliciesforfinancialinstrumentshavebeenappliedtothelineitemsbelow: 33. Financialassetsbycategory rade andotherpayables rade andotherpayables rade andotherpayables rade andotherreceivables rade andotherreceivables rade andotherreceivables rade andotherreceivable rade andotherreceivables rade andotherreceivables ating leaseliabilities ating leaseliabilities

195 060 127 171 121 395 178 197 144 163 141 532 139 180 101 960 138 180 101 960 receivables Loans and 24 939 34 050 82 543 55 880 25 211 38 852 82 543 20 385 19 632 22 141 20 062

------

630 591 328 730 300 831 493 413 302 089 270 012 606 705 301 274 270 735 470 407 279 077 247 000 through profitor loss -designated 23 012 21 613 23 919 26 798 23 006 23 012 2 273 3 537 3 298 Fair value

------

investments 8 954 8 357 8 454 8 954 8 357 8 454 8 454 8 954 8 357 8 454 8 954 8 357 maturity Held to

------

amortised cost liabilities at 203 970 145 769 Financial 202 735 A 23 500 23 500 23 500 73 261 23 500 23 500 23 500 for sale 23 500 23 500 23 500 23 500 28 814 91 298 24 382 72 402 23 500 23 500 vailable 1 171 1 094 181 541 235 64 83

------

Carrying Carrying amount amount 858 105 487 758 454 180 203 970 145 769 704 064 478 109 443 498 606 705 139 180 301 274 101 960 270 735 202 735 470 407 138 180 279 077 101 960 247 000 73 261 23 012 24 939 34 050 82 543 31 954 21 613 55 880 34 727 23 919 25 211 35 394 26 798 38 852 82 543 35 252 28 814 91 298 24 382 72 402 23 006 20 385 19 632 32 454 23 012 22 141 20 062 31 857 1 171 1 094 181 541 235 64 83 131

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 132 Company 2016

not applicableto thegroup. voluntarily replacedshare-based paymentawards. The amendmentiseffectivefortheyearcommencing 1 April 2011 andis The amendment clarifies themeasurement ofnon-controlling interests andprovides additional guidance onunreplaced and IFRS 3BUSINESSCOMBINATIONS • • The followingamendmentsweremadetothisstandardduringthe year: IFRS 7FINANCIALINSTRUMENTS: DISCLOSURES The followingrevisionstoIFRShavenotbeenearly-adoptedbythe group: REVISED STANDARDS released in2009. of financial assets carried at amortised cost and hedge accounting. The group has not adopted the requirements of IFRS 9 expand IFRS9in2011toaddresstherequirementsforoffsetting offinancialassetsandliabilities, impairment of the2009requirements. However, therequirementsreleasedin2009maybeseparately earlyadopted. The IASBintendsto released in2010. Accordingly, therequirementsreleasedin2010cannotbeearly-adoptedwithoutsimultaneous adoption in 2009andtherequirementsforclassificationmeasurementoffinancialliabilitiesderecognitionhavingbeen the releaseofIFRS9, withtherequirementsforclassificationandmeasurementoffinancial assetshavingbeenreleased IFRS 9iseffectiveforthegroupyearcommencing1 April 2013. However, theIASBadopted aphasedapproachfor these requirementstohaveasignificantimpactonthegroup’s consolidatedannualfinancialstatements. Instruments: • • • • • derecognition requirementsandadditionaldisclosurerequirements. The mainrequirementsincludethefollowing: IFRS 9, ascurrentlyissued, includesrequirementsfortheclassificationandmeasurementoffinancialassetsliabilities • • • recognition andmeasurement, initsentirety. The projecthasthreemainphases: The IASBhasissuedIFRS9FinancialInstruments, whichisthefirststepinitsprojecttoreplaceIAS39FinancialInstruments: IFRS 9FINANCIALINSTRUMENTS 35. Newstandardsandinterpretations Newstandards Loans fromgroupcompanies T Interest bearingborrowings Company 2014 Finance leaseobligation Loans fromgroupcompanies T Interest bearingborrowings Company 2015 Finance leaseobligation Loans fromgroupcompanies T Interest bearingborrowings rade andotherpayables rade andotherpayables rade andotherpayables

The requirementsforderecognitionaresimilartothosecontainedintheexistingstandardIAS39Financial through profitorlossondisposal. fair valueoffinancial liabilitiesattributable to creditriskbetransferred toothercomprehensive incomewithnorecycling F standard IAS39FinancialInstruments: The classificationandmeasurementoffinancialliabilitiesincluderequirementssimilartothosecontainedintheexisting such adesignationreducesanaccountingmismatch. A financialassetthatwouldotherwisebeatamortisedcostmayonlydesignatedasfairvaluethroughprofitorlossif assets arecarriedatfairvalue. of collectingcontractual cashflowsandifthosecompriseprincipal repaymentsandinterest. Allotherfinancial cost. The financialassetiscarriedatamortised costifitisthebusinessmodelofentitytoholdthatassetforpurpose cash flowchar Financial assetsaretobeclassifiedandmeasuredbasedonthebusinessmodelformanagingfinancialasset Phase III: Phase II: Phase I: Additional effective fortheyearcommencing1 April 2011. Clarification ofcertainqualitativeandquantitativedisclosuresrelating tothenatureandextentofrisks and willthereforenotaffectthe financial positionofthegroup. the year commencing 1 April 2012. These amendments address disclosure in the consolidated annual financial statements or financial liabilities designatedas at fair value through profit or loss, a further requirement is that all changes in the Classificationandmeasurementoffinancialinstruments; amortisedcostandimpairmentoffinancialassets; and Hedgeaccounting.

recognition and measurement, with certain additional disclosure requirements. Management does not anticipate disclosure requirements relating to the transfer of financial assets. This amendment iseffective forthe group for acteristics ofthefinancialasset. Therearetwomeasurementapproaches, namelyfairvalueandamortised

recognitionandmeasurement.

amortised cost liabilities at 173 921 129 989 130 126 Financial 132 133 40 617 52 720 75 548 57 913 71 470 . The amendmentis 1 171 1 016 705 508 235

Carrying amount 173 921 129 989 130 126 132 133 40 617 52 720 75 548 57 913 71 470 1 171 1 016 705 508 235 IAS 12INCOME TAXES settle insharesatanytime. least 12monthsaftertheaccounting period)notwithstandingthefactthatentitycouldberequired bythecounterpartyto non-current (providedthattheentity hasanunconditionalrighttodefersettlementbytransfer ofcashorotherassetsforat as currentornoncurrent. Byamendingthedefinitionofcurrent liability, theamendmentpermitsaliabilitytobeclassified as The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification IAS 1(AMENDMENT), ‘PRESENTATION OFFINANCIALSTATEMENTS’ particular paragraph 15(toachieveafair presentation)andparagraph 125(sourcesofestimationuncertainty)IAS1. classified asheldforsaleordiscontinuedoperations. Italsoclarifiesthatthegeneral requirement ofIAS1stillapply, in The amendmentclarifiesthatIFRS5specifiesthedisclosures required inrespectofnon-currentassets(ordisposalgroups) IFRS 5(AMENDMENT), ‘NON-CURRENT ASSETS HELDFORSALE AND DISCONTINUEDOPERATIONS’ statements asthegroupisnotpartytosharebasedpaymentsarrangements. identified. The adoption of the amendments tothe standard did not have an effect on the group’s consolidated annual financial irrespective ofwhetherornotthegoodsservicesreceivedunder theshare-basedpaymenttransaction canbeindividually The scopeofIFRS2hasalsobeenamendedtoclarifythatthe standardappliestoallshare-basedpaymenttransactions, the transaction. Inallothercircumstancestheentitywillmeasuretransaction asacash-settledshare-basedpayment. share-based paymenttransaction onlyiftheawardsgranted areitsownequityinstrumentsorifithasnoobligationtosettle The mostsignificantchangeisthattheentityreceivinggoodsorserviceswillrecognisetransaction asanequity-settled The amendment provides additional guidance on the accounting for share -based payment transactions among group entities. AMENDMENTS TO IFRS2GROUP-SETTLED ARRANGEMENTS The followingrevisionstoIFRShavebeenadoptedbythegroupastheirapplicationhasbecomemandatoryforreportingperiod: REVISED STANDARDS STANDARDSINTERPRETATIONSCURRENT YEAR AND IN THE ADOPTED however notapplicabletotheGroup. permitted. The amendmentsshouldbeappliedretrospectivelytotheearliestcomparative periodpresented.This standardis amendments correctthis. The amendmentsareeffectiveforannualperiodsbeginning1January 2011. Earlierapplicationis some voluntaryprepaymentsforminimumfundingcontributions. This wasnotintendedwhenIFRIC14issued, andthe funding requirementsandtheirinteraction’. Without theamendments, entitiesarenotpermittedtorecogniseasanasset The amendmentscorrectanunintendedconsequenceofIFRIC14, ‘IAS 19– The limitonadefinedbenefitasset, minimum IFRIC 14Prepaymentsofaminimumfundingrequirement The followinginterpretationsofexistingstandardsarenotyeteffectiveandhavebeenearly-adoptedbythegroup: INTERPRETATIONS improvement thatwillaffectthegroup. terminology oreditorialchanges, withminimaleffectonrecognitionandmeasurement. There arenosignificantchangesinthe improvement project aims to clarify and improve the accounting standards. The improvements include those involving As partofitsthirdannualimprovementprojecttheIASBhasissued2010editionimprovements. The annual ANNUAL IMPROVEMENT PROJECT errors’. The amendedstandardisnotapplicabletotheGroup. amendment appliesretrospectivelyinaccordancewithIAS8. Accounting policies, changesinaccountingestimatesand in whichtheexercisepriceisdenominated. Previously, theseissueshadtobeaccounted for asderivativeliabilities. The of theissuer. Providedcertainconditionsaremet, suchrightsissuesarenowclassifiedasequityregardlessofthecurrency amendment addressestheaccountingforrightsissuesthataredenominatedinacurrencyotherthanfunctional The amendment applies to annual periods beginning on or after 1 February 2010. Earlier application is permitted. The IAS 32CLASSIFICATION OFRIGHTSISSUES’ISSUEDINOCTOBER 2009 group. Furthermore, therevisionstodisclosuresarenotexpectedhaveasignificanteffectongroup. amendment addressesdisclosureintheannualfinancialstatementsandwillthereforenotaffectpositionof clarifies thedefinitionofarelatedparty. Theamendmentiseffectiveforthegroupyearcommencing 1 April2011. This The amendmentprovidesexemptionsfromcertaindisclosurerequirementsinrespectofgovernment-relatedentitiesand IAS 24RELATED PARTIES company isexemptfromincometax. the yearcommencingonorafter1 April 2012andisnotexpectedtohaveasignificant impactonthegroupasholding property is measured using the fair -value model in IAS 40 Investment property. The amendment is effective for the group for The amendmentprovidesapractical approachformeasuringdeferredtaxliabilitiesandassetswheninvestment 133

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 134 adjusted accordingly. statements, management consideredtheimpactonopeningbalancesofearliest comparative figuresandthesewere Accounting Practice ona basisconsistentwiththeprioryear. Where adjustments weredoneinthecurrentannualfinancial The financialstatementshavebeenpreparedinaccordance withtheSouth AfricanStatementsofGenerally Accepted 38. Prior perioderrors Condoned bytheBoard Irregular expenditureindentifiedinthecurrentyearrelatingto prior year Current yearIrregularexpenditure Opening balanceofun-condoned Figures inRandthousand recorded intherelevantexpenditureaccountsand(2015:R33,388 million)hasbeencondonedbytheBoard. million) duetonon-compliancewiththeSupplyChainManagementPolicy(SCM)andPFMA. This expenditurehasbeen The EasternCapeDevelopment Corporation (ECDC)incurred irregular expendituretotalling R25,377 million(2015:R41,464 37. Irregular expenditure Closing balance Movements onrevaluation COMPONENTS OFOTHER COMPREHENSIVEINCOME-COMPANY 2015 36. Other comprehensive income entirety. The adoptionofthisinterpretationisnotapplicabletothegroup. is unabletomakethisassessment, thehybridinstrumentmustremainsclassifiedasatfairvaluethroughprofitorlossinits the contract and the date of any contract amendments that significantly change the cash flows of the contract. If the entity assessment istobemadebasedoncircumstancesthatexistedthelaterofdateentityfirstbecameaparty contract whentheentityreclassifiesahybridfinancial assetoutofthe ‘fairvaluethroughprofitorloss’category. This This amendmenttoIFRIC9requiresanentityassesswhetherembeddedderivativeshouldbeseparated fromahost RECOGNITION AND MEASUREMENT’, EFFECTIVE1JULY 2009 IFRIC 9, ‘REASSESSMENT OF EMBEDDED DERIVATIVES AND IAS 39, FINANCIAL INSTRUMENTS: is notapplicabletothegroup. provide thecustomerwithongoingaccesstoasupplyofgoodsorservices(ordoboth). The adoptionofthisinterpretation used onlytoacquireorconstructtheitemofproperty, plant, andequipmentinordertoconnectthecustomeranetworkor services (suchasasupplyofelectricity, gasorwater). Insomecases, theentityreceivescashfromacustomerthatmustbe use eithertoconnectthecustomeranetworkorprovidewithongoingaccesssupplyofgoods agreements inwhichanentityreceivesfromacustomeritemofproperty, plantandequipmentthattheentitymustthen Effective fortransfer ofassetsreceivedonorafter1July2009. This interpretationclarifiestherequirementsofIFRSsfor IFRIC 18, ‘TRANSFERS OF ASSETS FROMCUSTOMERS’ their presentconditionandthedistributionishighlyprobable. also beenamendedtorequirethatassetsareclassifiedasheldfordistributiononlywhentheyavailablein whereby anentitydistributesnon-cashassetstoshareholderseitherasadistributionofreservesordividends. IFRS5has The interpretationwaspublishedinNovember2008. This interpretationprovidesguidanceonaccountingforarrangements IFRIC 17, ‘DISTRIBUTION OFNON-CASH ASSETS TO OWNERS’(EFFECTIVEONOR AFTER 1JULY 2009) period: The followingamendedIFRIC’s havebeenadoptedbythegroupastheirapplicationhasbecomemandatoryforreporting INTERPRETATIONS before theaggregationofsegmentswithsimilareconomiccharacteristics). purposes of impairment testing is an operating segment, as defined by paragraph 5of IFRS 8, ‘Operating segments’ (that is, The amendmentclarifiesthatthelargestcash-generating unit(orgroupofunits)towhichgoodwillshouldbeallocatedforthe IAS 36(AMENDMENT), ‘IMPAIRMENT OF ASSETS’, EFFECTIVE1JANUARY 2010

(25 377) 26 194 8 075 2016 -

Group (33 388)

33 389 8 075 2015

(25 377) 26 194 2016 8 075 Company

(33 388) 2015 33 389 8 075 3 137 - As adjusted Rounding Consolidation ofMagwaEnterprise Adjustment As previouslyreported T As adjusted Consolidation ofMagwaEnterprise Adjustment Balance aspreviouslyreported Retained Income As adjusted Adjustment Balance aspreviouslyreported Reserves As adjusted Consolidation ofMagwaEnterprise Adjustment Balance aspreviouslyreported Property As Adjustment Balance aspreviouslyreported Investment Properties Figures inRandthousand BALANCES ARETABULATEDOF ADJUSTMENTSTO ACCOUNT EFFECT BELOW: To theextentthataboveadjustmentsaffectcashflow statement, suchcorrectionshavebeeneffectedinthepreviousperiod. Cashflow statement Retained Income. The impactoftheseadjustmentsistabulatedbelow. The abovementionederrorshavehadanimpacton Total comprehensiveincomefortheyear, andconsequentlyanimpacton Total comprehensiveincomefortheyearandRetained and theimpactofsuchadjustmentistabulatedbelow. In the2014/15financialyear, thenon-controllinginterestwasincorrectlycalculated. Theerrorwascorrectedretrospectively Non-controlling interest adjustment whoseimpactonpreviouslyreportedfiguresistabulatedbelow. An errorinthedeterminationofaccruals2014/15resultedanunder-accrual ofR7,014million. This necessitatedand Deferred incomeandGovernmentgrants previous period. Monies receivedforsomeofthepropertiesmentionedabovehasalsobeenusedtoupdatesalesin Trade andotherpayables been correctedretrospectively. The impactofthecorrectiononpreviouslyreportedfigures istabulatedbelow. In thepreviousyears, theoperating leaseassethadbeenincorrectlyincludedin Trade andotherreceivables. This errorhas Trade andotherreceivablesoperatingleaseasset properties heldforsale. The impactofthisadjustmenton2014/15figuresistabulatedbelow. not havebeendisclosedinthevalueofInvestmentproperties. A furtherR6,257millionadjustmentduetoover-valuation of Title DeedsforInvestmentPropertiestothevalueofR22,817millionwerefoundbenotregisteredECDCandshould Investment propertiesandFair valueadjustments understated intheprioryearandhasnowbeencorrected. the depreciationwasunderstatedbyanamountofR3, 445. The revaluationadjustmentforowneroccupiedbuildingswas An amountofR3, 137millionwasunderstatedforbuildingsduetoincorrectcalculationoffairvalues. Also asaresultofthis, Property, PlantandEquipment, Reserves, DepreciationandOtherComprehensiveIncome below. ECDC hasretrospectrivelyconsolidatedMagwaEnterprise Tea (Pty)LTD. The impactonpreviouslyreportedfiguresistabulated Magwa Enterprise Tea (Pty)Ltd Eastern CapeDevelopmentCorporation The correspondingfinancialstatementsnotehaveaccordinglybeenadjustedfortheitemsbelow. rade andotherpayables Adjusted , plantandequipment

Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd

409 881 427 949 929 461 (14 051) 419 576 424 812 (29 074) 958 535 91 299 94 428 83 648 84 895 3 843 3 802 4 356 3 137 9 840 (307) 2016 6

Group 2 051831 2 051831 202 735 434 927 415 709 543 091 196 615 426 019 415 709 532 225

10 866 6 120 8 908 2015 ------

278 805 410 540 874 361 (29 307) 308 112 407 403 (29 074) 903 435 75 549 24 461 71 746 24 768 2016 3 802 3 137 (307) Company

1 - - -

132 133 203 615 407 403 730 371 132 133 203 615 407 403 730 371 2015 24 888 24 888 ------135

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 136 Adjustment ofT Consolidation of MagwaEnterprise As previouslyreported Revenue Consolidation ofMagwaEnterprise As previouslyreported Cash andcashequivalents Consolidation ofMagwaEnterprise As previouslyreported Inventory Figures inRandthousand As adjusted Adjustment As previouslyreportedat31March2015 As adjusted Reclassification from As previouslyreported Operating leaseasset As adjusted Consolidation ofMagwaEnterprise Reclassification toOper As previouslyreported T Increase ingovernmentgr Increase inoper Consolidation ofMagwaEnterprise Decrease infairvalueadjustment As previouslydisclosed Accounting profitasdisclosedinnote25 As adjusted Consolidation ofMagwaEnterprise Incorrect depreciationdiclosedinnote20 Adjustment As previouslydisclosed Depreciation asdisclosedinnote20 As adjusted Adjustment As previouslyreported F As adjusted Consolidation ofMagwaEnterprise Adjustment As previouslyreported Operating expenses As adjusted Consolidation ofMagwaEnterprise Adjustment As previouslyreported Government grants As adjusted Adjustment As previouslyreported Deferred income Figures inRandthousand rade andotherreceivables air valueadjustments

ax paidnote

ating expenses

Trade andotherreceivables

ating leaseasset

ants

Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd Tea (Pty)Ltd

beginning ofyear

Balance at (31) (96)

balance Closing (108) (85)

164 536 468 640 235 681 110 817 131 849 301 274 100 782 (25 862) 190 398 444 223 216 203 117 831 129 327 301 270 (25 862) 129 058 25 211 14 620 12 464 (7 014) 23 951 (9 797) 7 569 3 073 1 026 3 445 3 181 9 797 7 014 2 522 2 033 1 040 1 910 7 014 Charge to statement (824) (650) income 650 (83) 824 650 369 2016 2016 4 - -

Group Group

373 603 606 705 373 603 606 486 55 880

tax provision 54 443 Reversal of 2 033 2 033 1 910 (612) (473) 473 2015 2015 219 612 473 ------

149 572 404 578 171 763 101 960 Prior year (25 862) 175 434 394 119 164 749 108 974 (10 459) (25 862) provision 68 796 10 459 (7 014) 98 103 under 2016 2016 5 516 3 445 2 071 7 014 7 014 Company Company (8) (8)

------

231 325 231 325 T 2015 2015 otal (124) (124) ------

Group Company Group Group Company Group Group 2015 Group 2016 Computer software Computer software, other T Intellectual Property Computer software Computer software T Intellectual Property Computer software Computer software, internallygenerated 40. Intangibleassets F Bearer (Broodstock) RECONCILIATION OFBIOLOGICAL ASSETS Bearer (Broodstock) Bearer (Broodstock) 39. Biologicalassets Adjustment Other ComprehensiveIncome Adjustment As previouslyreported Non-controlling interest-StatementofComprehensiveIncome Adjustment As previouslyreported Position Non-controlling interest-StatementofFinancial Consolidation ofMagwaEnterprise As previouslyreported Other Figures inRandthousand otal otal arm fish

income

, other , other , internallygenerated , other

Tea (Pty)Ltd

V V V 4 695 aluation aluation aluation 4 231 4 231 Cost/ Cost/ Cost/

464

- -

Accumulated Accumulated Accumulated depreciation depreciation depreciation (4 118) (3 756) (3 756) (362) 2016 2016 2016

- -

(5 666) 25 647 (6 952) (9 673) 25 644 3 137 6 860 4 007 Carrying Carrying Carrying (92) 577 475 475 102 value value value 2016 3

- -

Group

15 997

24 240 12 260 24 240 9 577 V V V V V V 3 737 3 758 3 737 5 100 3 976 Opening Opening balance balance aluation aluation aluation aluation aluation aluation Cost/ Cost/ Cost/ Cost/ Cost/ Cost/ 2015 501 ------

Other changes, Other changes, Accumulated Accumulated Accumulated depreciation depreciation depreciation depreciation depreciation depreciation Accululated Accululated Accululated movements movements (12 549) (24 240) (4 159) (3 579) (3 660) (3 579) (8 970) (3 865) 24 240 2016 2014 2015 2014 2015 2014 2015 3 137 (294) Company

------

Carrying Carrying Carrying Carrying Carrying Carrying value value value value value value T T 2015 otal otal 24 240 24 240 3 448 5 418 3 290 5 100 158 158 111 207 98 ------

137

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 138 Company 2016 Stationery F Agricultur Production supplies Finished goods 42. Inventories Current liabilities Non-current liabilities time to repayable asagreedbetweenthepartiesfrom The loanisunsecured, G time to is repayableasagreedbetweenthepartiesfrom The loanisunsecured, W PRyan 41. Loansto(from) shareholders of thecompaniesconcerned. Registers containingdetailsoftheintangibleassets, includingdetailsofanyencumbrances, arekeptattheregisteredoffices SECURITY PLEDGED AS Computer software Company 2014 Computer software Company 2015 Computer software RECONCILIATION OF TANTIBLE ASSETS -COMPANY Computer software Computer software Intellectual Property Computer software Computer software Group 2015 Intellectual Property Computer software Computer software Group 2016 RECONCILIATION OF TANTIBLE ASSETS -GROUP Group 2014 eed A Musson

al produce

, other , other , other , other , internallygenerated , other , internallygenerated , other , internallygenerated

bearsnointerestandis bearsnointerestandis

Opening 3 448 2 033 balance 2 033 3 290 2016 2016 158

------

(28 814) (28 814) (28 306) (25 921) (2 893) Additions Opening Opening 2 504 5 418 2 033 balance balance 2 427 5 100 2 033 Group Group (508) 2015 2015 108 260 111 207 734

77 20 88 18 28

Additions through combinations 3 280 5 318 2 033 3 132 5 100 2 033 Additions Additions Opening business balance 537 148 218 473 158 2014 2014 98 64 77

------

Other changes,

(2 982) (5 113) (2 982) (5 100) movements T Additions Disposals ransfers (13) 2016 2016 473 (13) (13) 148 21

------

and impairment and impairment

Amortisation Amortisation Amortisation Amortisation (2 323) (2 256) Company Company 2015 2015 (474) (265) (285) (189) (169)

(96) (67) (96) (67) (81)

------

T T T T 2014 2014 otal otal otal otal 3 448 5 418

3 290 5 100 577 475 158 111 207 475 102 158 98 ------

T Disposals Opening balance RECONCILIATION OFMOVEMENT Investment property expected return. The non-currentassetsheldforsalerelatetoagreementsthathavebeensignedwithvariousparties. The BoardoftheEasternCapeDevelopmentCorporation resolvedtodisposeofinvestmentpropertieswhichdonotyieldthe NON-CURRENT ASSETS HELDFOR SALE Net Loss Loss onbiologicalassetsandagricultur F Net lossaftertax Net lossbeforetax Oper Finance costs Other income Revenue LOSS PROFIT AND T Finance leaseobligation: Interest bearingborrowings Loans fromshareholders: Accumulated loss Reserves Share capital Cash andcashequivalents T Inventory Biological assets Property, plantandequipment STATEMENT OFFINANCIALPOSITION company.Presented belowistheabridgedBalancesheetandProfitlossstatementsforcompany. ECDC tocommencethewindingupprocessofOceanwise(Pty)LtdanddisposalECDC’s significantshareholdinginthe either governmentortheprivatesector. DuringMarch2016theMECofDEDEAT approvedthesection54(2)requestfor During 2015/16theBoardofDirectorsECDCresolvedtowindupcompanyastherewasnoguarantee offundingfrom government. capital tocontinueoperations inthe2015/16financialyearwhilstaninvestorandgrant fundingwasbeingsourced from Oceanwise (Pty)LtdhasbeenunderfinanacialstressduringthefinancialyearwithECDCandIDCprovidingnecessary OCEANWISE DISCONTINUEDOPERATION assets heldfor sale 43. Discontinuedoperationsor disposal groups or non-current

ransfers (to)fromInvestmentproperties rade andotherpayables rade andotherreceivables air valueadjustments ating expenses

current

non-current

al produce

8 985 4 740 4 245 8 985 2016 2016

- -

(6 554) (2 980) 14 095 4 245 4 245 Group (316) 2015 2015

(53 696) (10 689) (44 688) (27 018) 103 709 (17 409) (10 000) (10 477) (34 267) (34 367) (33 299) 14 095 (2 384) 16 479 14 095 (8 952) (2 778) 2 739 2 101 1 666 271 478 510 144 2016 2014 2016 2014 (4) - - -

Group Group

8 985 4 740 4 245 8 985 2015 2016 2015 2016 ------

Company (6 554) (2 980) 14 095 2016 2015 2016 2015 4 245 4 245 (316) Company Company

------

2014 2015 2015 2014 14 095 (2 384) 16 479 14 095 ------139

ECDC | ANNUAL REPORT 2015/16 ECDC | ANNUAL REPORT 2015/16 140 The group’s obligationsunderfinanceleasesaresecuredbythelessor’s chargeovertheleasedassets. The leasetermis3yearsandtheeffectiveborrowingrate was8%. I Current liabilities Non-current liabilities - insecondtofifthyearinclusive - withinoneyear Present valueofminimumleasepaymentsdue Present valueofminimumleasepayments less: futurefinancecharges - insecondtofifthyearinclusive - withinoneyear Minimum leasepaymentsdue 44. Financeleaseobligation

t isgrouppolicytoleasecertainequipmentunderfinanceleases.

2016 541 541 541 612 530 530 (71) 601 11 11 11

1 094 1 094 1 094 1 254 Group (160) 2015 553 541 541 553 625 629

2014 64 64 64 64 14 50 50 14 50 14 -

508 508 508 573 2016 508 508 (65) 573 - - -

Company 2015 1 016 1 016 1 016 1 147 (131) 508 508 508 508 573 574

2014 ------LIST OFACRYONYMS UDDI TIA SMME RED RDP NMBBC MEC PMF PGDP PIDS IT ISIDP IFRIS IDZ ICT HR HOD GDP ERP ECRDA ECITI ECDC dti DEDEAT BWA

Uitenhage DespatchDevelopmentInitiative T Small, Rur Reconstruction andDevelopmentProgr Nelson MandelaBayBusinessChamber Member oftheExecutiveCouncil Public FinanceManagement Provincial GrowthandDevelopmentPlan Provincial IndustrialDevelopmentStr Information technology Integr International FinancialReportingStandards Industrial developmentzone Information andcommunicationstechnology Human resources Head ofdepartment Gross domesticproduct Enterprise resourceplanning Eastern CapeRur Eastern CapeInformation Eastern CapeDevelopmentCorpor Department of Economic Development, Business W echnology Innovation Agency echnology al enterprisedevelopment ated socialinfrastructure deliveryprogramme mediumandmicroenterprise omen’s Association Trade andIndustry al Development Agency Environmental Affairs and Tourism Technology Initiative Act ation ategy amme 141

ECDC | ANNUAL REPORT 2015/16

HEAD OFFICE Ocean Terrace Park, Moore Street, Quigney, East London PO Box 11197, Southernwood, 5213 Tel: +27 (0) 43 704 5600 | Fax: +27 (0) 43 704 5700

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PORT ELIZABETH 152 Cape Road, Mill Park, PO Box 1331, Port Elizabeth, 6000 Tel: +27 (0) 41 373 8260 | Fax: +27 (0) 41 374 4447

Satellite offices MOUNT AYLIFF SEDA Building, Nolangeni Street, Mount Ayliff, 4735 Tel: +27 (0) 39 254 0584 | Fax: +27 (0) 39 254 0599

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[email protected] www.ecdc.co.za