annual report 2013/14 - ce r

reporT2013/14

annual

CONTENTSMEC’s Message 01

Chairman of the Board Statement 02

Managing Director’s Overview 04

About LEDA 10

Institutional Framework 12

Board of Directors 13

Executive Management 15

Performance Reports 17

Annual Financial Statements 54

01 LEda aNNUaL REPORT 2013/14

In the previous LEDA Annual Report, I provided feedback on the successful completion of the amalgamation of previously autonomous LEDET parastatals. Two important factors have since emerged: The first is the fact that, as we compile this Annual Report, the fourth democratic administration is winding to a close; and secondly, that continuity is expected in the economic policy thrust of the incoming administration (2014 – 2018), via the implementation of the National Development Plan (NDP), as one of several strategic frameworks.

The NDP’s Vision 2030 flags crucial shifts in governance outlook, which include several factors to be taken into account in order to achieve a robust and globally competitive economy. I am encouraged by the fact that the Department’s mandate and, by implication, that of the Limpopo Economic Development Agency (LEDA), will still enjoy the benefit of refined policy continuity in the NDP.

There is, for instance, a continued focus on the creation of sustainable job opportunities; the support and development of small and micro enterprises; and a greater focus on accelerating rural development – all of these against a background of responsible and prudent interaction with the environment. There is now, more than ever, greater urgency in improving the lives and livelihoods of the people of Limpopo – our collective responsibility in crystallising the gains of democracy for our province.

Seaparo Charles SekoatiMEC: Department of Economic Development, Environment and Tourism

MEC’s Message

Our collective responsibility in crystallising the gains of democracy for our province

LEDA ANNUAL REPORT 2013/14 02

Over the past five years, the Limpopo Economic Development Agency (LEDA) underwent various changes, which resulted in a degree of instability while, at the same time, establishing the foundation for a more effective organisation.

Key among these changes were the organisational challenges emanating from the amalgamation of the Limpopo Business Support Agency (LIBSA), Trade Investment Limpopo (TIL) and the

Limpopo Agribusiness Development Corporation (LADC). Each of these amalgamated organisations displayed unique characteristics, and followed different business processes, while they all had a diverse corporate culture and incongruent systems.

The LEDA Board, in conjunction with senior management, spent a considerable amount of time and effort integrating the various corporate cultures into one coherent organisational ethos, synergising business processes and systems, while restructuring LEDA to transform it into an effective organisation.

In this regard, the Board is satisfied with the progress made during the year under review. A new strategy has been clearly defined to charter the future direction of LEDA, as we pursue the overarching objective of job creation via diversified industrialisation, in alignment with both national and provincial priorities.

The establishment of special economic zones (SEZs); the establishment of an Industrialisation Division within LEDA; the planned fleet renewal of Great North Transport (GNT), which manages our public transport business; the plans to sweat our mining assets housed in Corridor Mining Resources (CMR); and of our envisaged funding capacity for the growth of Risima, our home financing subsidiary, all form part of our future growth strategy.

The Board is working relentlessly with management to drive the industrialisation initiatives that will cut across all our business verticals. In the not too distant future, we expect to see increased industrial activities centred on the production of mining machinery and tools, the beneficiation of minerals, the processing of agricultural products and the application of new technologies.

Since the appointment of the current Board in August 2013, more than six directors meetings were held, first of all to stabilise the organisation and, secondly to provide the necessary guidance and oversight. Significant progress was achieved via improved governance, clearly defined organisational objectives, improved staff

Chairman of the Board Statement

The Board is working relentlessly with management to drive the industrialisation initiatives


morale, as well as the utilisation of discipline to ensure both effectiveness and compliance. The Board, via its committees, endeavoured to provide management with the required support and guidance.

The Audit and Risk Committee’s relentless efforts, with management’s support and cooperation, resulted in an unqualified audit opinion. The decision taken by the Board during the early stages of 2014, to centralise the Audit and Risk Committee for the group as a whole, has proven correct as evidenced by cleaner audits for all our subsidiaries. However more work is required to institutionalise our internal control systems, in order to ensure a consistently unqualified audit opinion for the group in the years ahead.

The Board’s Remuneration and Human Resources Committee worked very hard during the period under review to finalise the design of the organisational structure and the placement of executives. Other human resources-related policies and procedures, like recruitment, were refined to ensure that they meet the organisation’s requirements – both in terms of relevance and effectiveness.

During the period under review, activities of other board committees and, more specifically, the Credit & Investment Committee and the Procurement Committee, were curtailed by the limited budget within our financing and investment business. The Board is working closely with the shareholder to find ways of increasing LEDA’s funding capacity so that our reach could penetrate all areas of the province.

As part of the organisational renewal, we increased stakeholder engagements during the period under review, to ensure that our work and activities are aligned and consistent with the Limpopo Provincial Government’s plans and priorities, and that they remain relevant solutions to the economic problems of our people. The Board fully realises that the enormity of the future challenges of economic development and job creation will, for many years to come, continue to overstretch our financial capabilities. Therefore, the future will require us to find innovative ways of raising funds to supplement our current sources. The co-funding agreement that was signed with the Industrial Development Corporation during the period under review, forms part of the strategy of stretching our budget to increase our reach.

Finally, on behalf of the Board and staff members of LEDA, I would like to thank the Member of the Executive Council (MEC), Mr Seaparo Sekoati who, during the past year has played the important and most welcome role of an actively interested shareholder. The guidance by, and cooperation from his office and his department as a whole enabled us to execute our responsibilities. My co-directors discharged their duties with the required diligence and have increasingly exercised their independence to ensure that LEDA’s interests transcend all other interests. Without the support of senior management and all LEDA members of staff, the directors’ contribution would not have been possible.

On behalf of the Board, I extend our gratitude for the role played by both management and staff, in recognising that, despite the collective challenges still facing us in ensuring improved and sustainable organisational performance, we are confidently marching in the right direction.

As we march into a new financial year, and create more jobs in our economy, let us all ensure that 2014/15 shows a significant improvement on the year that is now behind us!

Mr M LekotaChairman of the Board


This overview is presented against the backdrop of two critical occurrences in the history of South Africa. People from virtually all parts of the world came to our country towards the end of 2013 on the death of the Father of our Nation, the elegant world icon Nelson Rolihlahla Mandela. The event once again placed the spotlight on the person but also served as a reminder to the world and to us as a nation about the remarkable transition to democracy. We also celebrated our first 20 years of democratic rule and freedom, reflecting significant change and improvement.

ECOnOMiC EnvirOnMEnt

The year April 2013 to March 2014 has been a period of high volatility with perpetual adjustments and changes in economic forecasts. In later global economic prospects reports, the SARB cut South Africa’s economic growth forecast for 2014 to 1,7% from an earlier forecast of 2.7%. The bank also downwardly revised its economic growth forecast for 2015 to 3% from 3.4% previously, and left its outlook for 2016 unchanged at 3.5%. The tight monetary policy, combined with labour disputes and weak electricity supply, will keep growth subdued in South Africa.

Economic growth in sub-Saharan Africa is expected to pick up to about 5.1% in 2015 and 2016. GDP growth is projected to increase from 1.8 per cent in 2013 to 3.5 per cent in 2016. The medium-term outlook is supported by investment in electricity and transport that will lift output constraints, an expected pick-up in private investment and low real interest rates. The stronger global recovery presents new opportunities to increase exports, provided that the domestic economy can raise productivity and competitiveness.

Limpopo like the other provinces in South Africa is a key element of the global community and is not immune from the vagaries of the global economic fluctuations. In view of the European Union crisis legacy, growth is still set to remain moderate, but a gradual easing of the drag related to deleveraging, financial fragmentation, adjustment of external imbalances and uncertainty remained an EU challenge. Perceptions of economic conditions globally at the present time are satisfactory and the near-term outlook is fairly positive. Sentiment

Managing Director’s Overview

LEDA will commence with the full implementation of the revised strategic plan


has improved in North America and Europe, although not across all countries, but has deteriorated in Asia, Latin America and the Commonwealth of Independent States, especially in China, Brazil and Russia.

Subdued external demand for South African exports, especially in very fragile European markets and a slowing Chinese economy, coupled with weakening consumption growth domestically, requires that local businesses intensify market penetration efforts where the expansion momentum is either recovering, such as in the United States, or relatively robust as in numerous African economies. Over-capacity in some industrial commodities, coupled with the weaker Chinese demand dynamic may imply that the downward trend in prices either remains in place or is not significantly reversed in the months ahead, with adverse implications for mining investments, also affecting investor appetite. This has been a manifestation in the chrome commodity sector and greatly exposes LEDA to high risk on the revenue stream of LEDA imported loss on consolidation of our investment in ASA Metals and Dilokong Chrome Mine.

LEDA remains optimistic about the economic growth prospects of the Province, alongside the expected growth of the national economy and the National Development Plan gaining momentum. Infrastructure will increase to support new and emerging industries in Lephalale alongside the development of Special Economic Zones (SEZs) anticipated to be designated for Musina and Tubatse in the foreseeable future.

OvErviEw

It is an important milestone for us that amalgamation of the former development agencies in Limpopo was completed under the auspices of the Limpopo Economic Development Agency. The amalgamation objectives are materializing, albeit slowly. These include reduction of costs, elimination of duplication and enhanced coordination and efficiency. It is also encouraging that, in spite of the complexities accompanying the amalgamation, the AGSA has issued an unqualified audit opinion post amalgamation after the daunting and repeated legacy of qualified opinions.

The evolving LEDA constantly strives to keep in step with the economic policy discourse as well as the economic growth and development objectives of South Africa. These have aptly found expression in the revised strategic plan through the goals reflected under the profile section of this report.

InduStrIaLISatIon dIvISIon

This Division was recently reconfigured and groups together all the functions designed to support our industrialisation efforts. I will briefly reflect on the activities in each of the constituent Departments.

Special Economic Zones and Corridor Development is a new area focusing on the development of SEZs as we pursue the final designation of Musina and Tubatse already identified as having SEZ potential. The Corridor Development part will pursue the development of new industrial and other infrastructure development in Lephalale and Waterberg together with any other growth points in Limpopo.

Land, Property and Infrastructure Development is the area housing the existing industrial parks, the main ones being in Seshego, Lebowakgomo, Nkowankowa and Shayandima. It also houses the commercial properties and office blocks, which are being leased to various entrepreneurs. This property portfolio, measuring some 764 771 square metres is old, having been constructed during the homeland era. Despite its general state of disrepair the portfolio is responsible for significant economic activity and job creation through the approximately 1 397 entrepreneurs utilising the space rented from us. These entrepreneurs employ approximately 10 000 people. The base rental charges are very low as a result of the condition and location of the properties, which is exacerbated by the aftermath of the withdrawn decentralisation incentives for rental utilised during apartheid to attract investment in rural areas. The occupancy levels reflect a satisfactory demand with steady growth, which will rise in line with the anticipated economic improvement.

The Agribusiness Development Department partly emanates from the discontinued Limpopo Agricultural Development Corporation (LADC) which was amalgamated into LEDA. The linked agricultural subsidiaries are treated similarly to the other subsidiaries for transport and housing that were part of the former LimDev


component of the merged entities. The performance of the unit was lacklustre in the year under review as a result of uncertainties that persisted until the last quarter of the financial year. A few projects were either withdrawn or deferred for various reasons.

infOrMAtiOn, KnOwLEDgE AnD PrOgrAMME MAnAgEMEnt DiviSiOn

The Division was also reconfigured in the third quarter marking the reorganising of what was previously known as the Knowledge Economy Division. The changes include the transfer of the ICT (Broadband infrastructure and allied function) to the Department of Economic Development, Environment and Tourism (LEDET); The Division has since been transfigured to include the internal ICT previously reporting to Finance as well as the addition of Programme Management and has been renamed Information, Knowledge and Programme Management as per heading. The added Programme Management component will assist LEDA to improve its programme planning, tracking and communication. The projects completed prior to the restructuring are presented under the annual performance section of this report which reflect significant achievements.

EntErPriSE DEvELOPMEnt AnD finAnCE DiviSiOn

The hybrid nature of LEDA post-amalgamation poses a complex combination of financial and non-financial services which currently impact on the prospects for financial sustainability of a Schedule 3D institution that should eventually reduce dependence on government funding. It is necessary for us to allow financial and non-financial services to co-exist until the restructuring and realignment of these functions has been completed. There is a market expectation that we should provide both these services for the foreseeable future and avoid hasty changes that will negatively impact on the historic beneficiaries.

The non-financial activities of the division fill a critical void in skills development and cooperative development and support. The output on the non-financial side of the division exceeded several targets that had been set for the year. The loan amount granted remained low against the previous year although there was a notable increase in loans granted during the third quarter of 2013. The SMME loans granted through the division fill a critical void as our vetting is typical of a development finance institution which is less risk averse. The Division also assists in funding small and emerging enterprises who require capital to fund various contracts awarded to them and which do not appeal to the commercial banks.

The level of impairment is much less for the new loans, reflecting a gradual improvement in the aging of the loan book. Arrear loans remain high as a result of the old book that has yet to be cleaned up.

The Division established important cooperation agreements with other SOEs such as Transnet, Technology Innovation Agency (TIA) and the Industrial Development Corporation (IDC) through various memorandums of agreement. These will increase the capacity of LEDA through the various forms of collaboration arrangements covering the sharing of intelligence and the co-funding of certain projects.

trADE AnD invEStMEnt PrOMOtiOn DiviSiOn

The division houses functions that are essential for supporting the pursuit of economic growth. The division historically provided support of a non-financial service nature including, the year under review.

Growth Sectors focus includes researching and packaging projects in new technologies and the green economy. It also covers the increased focus in agro-processing and beneficiation. A few projects are still being conceptualised and various investments are under consideration for a few feasible projects.

Investment Promotion focusses on attracting and supporting both foreign direct investment (FDI) and local investment which is equally important. The projects tracked and facilitated are reported under the section on performance report. The unit has identified a few projects in which we would like to take equity as we embark on the journey towards sustainability achieved by growth in income and assets.


Export Promotion and Development continued to support existing and new exporters. It also continued to provide training and support to new and emerging exporters especially those in BEE entities. Another area of focus has been to provide support for quality improvement essential in export trade.

Project Facilitation and Venture Capital is a new function added to this division. In the past we investigated projects without a financial or investment interest for LEDA. In this new Department we will consider and take up equity in projects and also increase competence in project fund raising. Initial work to conceptualise the unit commenced in the third quarter and little progress has been made thus far.

risima Housing Finance Corporation (SoC)

Risima Housing Finance Corporation continues to boast its successful rural housing finance programme. It has a unique offering that finances homes with the title of permission to occupy (P.T.O) in the traditional settlement areas. The arrear rates are within a surprisingly good level which should serve to dispel the notion that less affluent communities essentially present a higher lending risk. It has arrear rates in the order of a mere 1.2% which compares favourably with commercial banks and in certain instances performing even better. The demand for housing finance remains high. Growth is, however, constrained by the availability of capital which is receiving attention.

Corridor Mining resources (SoC)

CMR retains its focus on pursuing the development of mining properties in the province. CMR stives to optimise the development of the vast mineral resources in Limpopo to ensure economic growth, job creation and to promote black participation in the mining sector.

The company facilitates development of the assortment of mineral prospecting rights held through the various subsidiaries registered under Corridor Mining Resources. The properties are at different stages of prospecting with some very close to obtaining mining rights and going into production in the foreseeable future. Limited financial resources hamper the speed of finalising prospecting and becoming operational. The potential for job creation to be derived from the properties held by Corridor Mining Resources is significant.

Great north transport (SoC)

Great North Transport continues to have a huge economic impact in the province. It provides mobility to an estimated 100 000 passengers on a daily basis, whilst utilizing its fleet of 540 buses.

The passenger numbers for the year under review have reduced due to various factors such as reduced operating days in the year and increased competition. These factors place pressure on the profitability of the company compared to previous periods. The company has also embarked on fleet replacement to reduce operating costs associated with a aging fleet. GNT also continues to operate on routes that are not receiving any transport subsidy in Phalaborwa and Bapedi. It is in this way that we contribute to socio-economic development that cannot be evaluated through traditional financial performance measures. These depots thus operate at a loss but the welfare of the public is a good reason to provide the service.

The company focuses on the safe transportation of the working and non-working general public, as well as school children. Great North Transport carried more than 31.6 million passengers in the year under review and is exploring the development of new routes in underserviced areas.

AgriBuSinESS SuBSiDiAriES

The agribusiness component of LEDA manages a few companies predominantly producing tea.

Venteco Tea Estate produces quality South African tea that is disappointingly slow in gaining market share despite its heritage and good quality. We are constantly exploring plans to improve the viability of the project through increased market share and new distribution channels.


Mununzwu Tea Estate is under care and maintenance and is therefore not producing tea for processing at the moment. We are considering various options that will bring a turnaround to this project.

Mashashane Hatchery has potential for expansion to reduce the supply shortfall and demand for chicks. It will also have linkages with the recently developed abattoir for the slaughter of chickens.

finAnCiAL PErfOrMAnCE

The financial year ending 31 March 2014 has been a difficult one for the group which is the first full financial reporting period for LEDA post the amalgamation that was completed in December 2012. As alluded to earlier, the LEDA group is not immune from the hardships of global economic conditions, which also affect developing economies.

The group posted a Net Loss Before Tax of R 198 million for the financial year ending 31 March 2014 compared to a R168 million loss reported for the same period the previous financial year. The loss is mainly due to impairments on our investment in associates i.e. ASA Metals (Pty) Ltd and the abattoir plant in the Agribusiness unit.

As a result, there has also been a corresponding decline in our asset base from R1.6 billion Total Assets recorded in the financial year ending 31 March 2013 to R1.4 billion in the current financial year. However, the group financial position remains strong as a result of low gearing with Total Assets exceeding Total Liabilities by R1 billion. There has also been an improvement in Cash and Cash Equivalents from R123 million in the financial year ended 31 March 2013 to R159 million in the current year. This can be attributed mainly to improvements in working capital management.

We are expecting the Group’s financial performance to improve in the next financial year as major impairments have already been absorbed and the global economy is expected to improve. There are plans underway to streamline our processes and value chain to effectively take advantage of the amalgamation by focusing on cost containment, improving working capital and undertaking major capital projects by leveraging our financial gearing position.

thE wAy fOrwArD

LEDA will commence with the full implementation of the revised strategic plan. The pivotal point will be the four strategic goals and further alignment with the National Development Plan.

In terms of strategy implementation we are guided by the four strategic goals:

the hybrid nature of LEDA post amalgamation poses a complex combination of financial and non-financial services which

currently impact on the prospects for financial sustainability of a Schedule 3D institution that should eventually reduce dependence

on government funding.


• Accelerated industrial diversification through strategic economic development initiatives

• Sustainable enterprises in targeted sectors of the economy

• Increased trade and investment in Limpopo

• Public accountability; sound corporate governance and sustainable resource utilisation

LEDA will continue to take an active role in the relevant Technical Working Groups (TWG) established to drive the Limpopo Economic Growth and its revised version – the Limpopo Development Plan under way. The TWGs are a great source of inspiration for us because we are afforded the opportunity to interact and plan under the guidance of captains of industry, spanning both the private sector and the larger State Owned Enterprises.

We will strive to implement the various MOUs and collaboration agreements to leverage resources be it of a funding or non-funding nature. We have concluded sound agreements with the likes of the IDC, Transnet and TIA as well as with entities in the private sector, and look forward to synergies. LEDA as a Development Finance Institution (DFI) straddles the provision of financial services (business for profit) and non-financial services (support without financial gain). We will align to seek the appropriate balance between these two important complimentary roles with long-term sustainability in mind. The structure is aligned to the strategy and recruitment will be prioritized. We will continue to engage with staff and ensure that morale does not relapse for any reason.

We are determined to ensure that staff morale does not return to the levels experienced up to the third quarter of the year under review. All outstanding people issues arising from the amalgamation will be resolved during the first half of 2014. We will enhance the performance management system (PMS) that was adopted recently after being accepted by the organizing union.

ACKnOwLEDgEMEntS

I wish to thank LEDA management and all employees for their response to the call I made on my return to office that we embrace the future together. The resilience and overwhelming response during the last two quarters of the year under review is appreciated. I am encouraged by the determination that accompanied our mission to engage without delay in order to regain the time lost in a difficult environment. It is remarkable that we successfully cleared the AGSA findings of the previous year to obtain the first unqualified audit opinion for LEDA.

I thank LEDA Board members for their support in ensuring that we remain committed to our resolve and to the task of advancing our mandate. There is notable progress in the commitment we made to lift staff morale although we had less than half a year to accomplish this. The support from the provincial government is appreciated. I thank the HOD and all staff at different levels within LEDET who have dealings with us at LEDA.

Finally, I wish to express my sincere appreciation to the Honourable Seaparo Charles Sekoati, the MEC for Limpopo Department of Economic Development, Environment and Tourism for his decisive leadership and for the able manner in which he represents the shareholder.

Lesley MasiaManaging Director


LEDA is established in terms of the Limpopo Development Corporation Act, Act No. 5 of 1994, as amended, and complies with the Public Finance Management Act (PFMA) as a Schedule 3D agency. It has been established as a special purpose vehicle, culminating in the amalgamation of four historical agencies, namely: Trade and Investment Limpopo, the Limpopo Business Support Agency, the Limpopo Agribusiness Development Corporation and the Limpopo Economic Development Enterprise.

1. viSiOn

A leader in sustainable economic growth and job creation.

2. MiSSiOn

To implement integrated economic development initiatives in Limpopo, through:

• accelerated industrial diversification;

• increased levels of trade and investment; and

• by developing sustainable enterprises.

The mission reflects the role of both the Limpopo Economic Development Agency (LEDA), as the policy-implementing arm of the province, and LEDET, as follows:

1) Providing business intelligence, as well as research and development (R&D) towards innovative solutions: Using scientific impact assessment tools and approaches to develop scenarios and business intelligence; monitor and evaluate the impact of projects; and provide capacity support in areas of development, such as economic development research. Being a first point of call in terms of business and market intelligence.

2) Conceptualising economic programmes and drivers: Unpacking policy directives, as well as understanding what is unique to the region and will stimulate growth. Supporting integrated region-wide planning on economic development, as well as investment planning and advancement. Understanding the provincial value proposition and its comparative global competitiveness.

3) Identifying and packaging development opportunities and leveraging partnerships: Developing bankable business and/or project plans to best attract and leverage private sector and other partnerships and investment to targeted projects; and providing a framework for both government’s involvement and its exit/handover strategy and approach with regard to identified projects and programmes. Optimising and leveraging that which other partners are doing in a particular space.

4) Supporting local economic development (LED) capabilities (where LED is by definition localised): Providing a regional view and supportive framework to LED in terms of how it might integrate with, and benefit from a regional focus and strategic framework, while identifying and leveraging opportunities for collaboration.

5) Customising support for priority economic sectors and subsectors: Understanding the value chain of the sectors targeted for support, followed by clearly targeting support towards industrialisation and the growth of labour-intensive industries. Focusing only on sectors that are most likely to benefit from the impact and be consistent in terms of growth and development. Understanding the unique selling point of Limpopo. Driving Limpopo’s global competitiveness and understanding the global value chain.

6) Coordinating and managing the implementation of strategic infrastructure and economic interventions: Acting as a “Centre of Excellence”, providing capacity, capability and competence in project and

About LEDA


programme management, project planning, project oversight and management of development interventions.

7) Facilitating trade and investment: Sourcing and facilitating funding for investment projects in the province; supporting business expansion and retention; supporting and driving enterprise development; and attracting new industries to the province.

3. inStitutiOnAL vALuES

Values identify the principles for the conduct of the institution in carrying out its mission. In working towards the achievement of its vision and mission, LEDA subscribes to the following internal values, which are in line with the Batho-Pele principles:

LEDA VALUE STATEMENT WHAT IT MEANS IN PRACTICEAccountability The obligation to account. To take responsibility for one’s actions.

Excellence To be result-oriented, cost effective; to ensure superior performance; to strive for client/stakeholder sat-isfaction.

Integrity To be professional, have a commitment to ethics and focus on justice and fairness. To be honest, trust-worthy, open and loyal.

Transparency The obligation to act in an open and transparent manner.

Diversity To display respect for different cultures and different perspectives. To encourage different views. To display tolerance towards others. A commitment to employment equity and the rural/urban balance required for the organisation’s main focus.

The discussion on values specifically emphasised that the LEDA values require targeted management intervention to ensure that these values are visible and “lived”, while they should also be assessed as part of LEDA’s performance management approach, under direction of the Managing Director.

4. StrAtEgiC gOALS

1) Accelerated industrial diversification via strategic economic development interventions.

2) Sustainable enterprises in targeted sectors of the economy.

3) Increased trade and investment in Limpopo.

4) Public accountability; sound corporate governance; and sustainable resource utilisation.

Individually, each goal represents an aspiration LEDA seeks to achieve as it pursues its mission (aim). Collectively, the goals define the full spectrum of LEDA’s role and focus. The attainment of each goal will require LEDA-specific focus and, of great importance, support and collaboration from both internal and external stakeholders.

Service delivery agreement

LEDA’s work and focus are governed by its Service Delivery Agreement, which outlines LEDA’s primary objectives as follows:

1) To be both a stimulus and catalyst in enhancing provincial economic capacity.

2) To provide “thought leadership” by way of circumventing sporadic, uncoordinated and disjointed economic development projects which, in most instances, operate in direct contrast with stated policies and the province’s economic interests.

3) To strive towards organising a more coherent system of economic delivery in the province.

4) To act as custodian of policy implementation, by assisting government in identifying specific high-impact projects that will accelerate and sustain growth and development, as well as creating productive and sustainable employment opportunities.


PRogRAMME MANAgEMENT

offICE

institutional framework

5) To lead government in planning and executing strategies towards shaping the future of Limpopo’s economy, by shifting from a culture of disaggregation to a more collaborative approach. It also has a long-term view with regard to expanding the provincial economy.

6) To pursue an industrialisation trajectory that is responsive to:

• the promotion of more labour-absorbing industrial sectors, with the emphasis on tradable labour-absorbing goods and services, as well as economic linkages that catalyse employment creation;

• the promotion of a broader-based industrialisation path that is characterised by greater levels of participation; and

• the intensification of Limpopo’s industrialisation process and the province’s movement towards a knowledge and skills-based economy.

MANAgINg DIRECToR

gRoUP INTERNAL AUDIT gRoUP CoMPANY SECRETARY

gRoUP Coo

INDUSTRIALISATIoN

INfoRMATIoN, KNoWLEDgE AND

PRogRAMME MANAgEMENT

ENTERPRISEDEVELoPMENT AND

fINANCE

TRADE AND INVESTMENT

PRoMoTIoN

CoRPoRATE SERVICES

gRoUPfINANCE

SEZ AND CoRRIDoR DEVELoPMENT

LAND AND PRoPERTY

MANAgEMENT

AgRIBUSINESS DEVELoPMENT

RESEARCH AND DEVELoPMENT

INfoRMATIoN TECHNoLogY

fINANCIAL SUPPoRT

BUSINESS SUPPoRT

TRAININg AND DEVELoPMENT

gRoWTH SECToRS

foREIgN DIRECT INVESTMENT

DoMESTIC DIRECT INVESTMENT

ExPoRT DEVELoPMENT

PRoJECT fACILITATIoN AND VENTURE CAPITAL

HUMAN RESoURCES

LEgAL SERVICES

MARKETINg AND CoMMUNICATIoNS

ADMINISTRATIoN AND fACILITIES

fINANCE MANAgEMENT

SUPPLY CHAIN

CHIEf RISK offICER

SUBSIDIARIES

RISIMA HoUSINg fINANCE

CoRPoRATIoN

gREAT NoRTH TRANSPoRT

CoRRIDoR MININg RESoURCES


Mr M H LekotaChairman of the Board

B.Com; MBA; Directors Development Programme; Effective Leadership Programme; SAPOA Property

Development Programme; Board Leadership programme

Mr D KourtoumbellidesDeputy Chairperson

General Certificate of Education; Major in Economics; Certificate in Bookkeeping

Mr M MaphuthaBoard Member

Diploma - Senior Primary Teacher; Board Leadership Programme

Leadership

Board of Directors

Mr L MasiaManaging Director

Advanced Business Management Programme (Cum Laude);MBA; Technical and Financial Valuation of Mining Assets Course;

Board Leadership Programme; Executive Leadership Development Programme; Executive Leadership Development Programme “WInGS”


Ms M A MphahleleBoard Member

LLB

Mr S V ChepapeBoard Member

Community Based Development; Board Leadership Programme; Technical & Financial Evaluation in Mineral Projects; Monetary Policy & Public Finance; Strategic Implementation and Control; Environmental &

Sustainable Development Law; Prospecting & Mining Law

Mr S C NkadimengBoard Member

B.Juris; Executive Development Programme; MA in Public Administration

Ms K MarogaBoard Member

CA (SA); B.Compt (Hons); Post Gradauate Diploma in Mining Engineering


Mr L MasiaManaging Director

Advanced Business Management Programme (Cum Laude); MBA (WITS); Technical and Financial Valuation of Mining Assets Course; Board

Leadership Programme; Executive Leadership Development Programme; Executive Leadership Development Programme “WInGS”

Mr S T M PhetlaGroup Chief Operations Officer

B.Admin; B.Admin (Hons); PMD; CPBPM

Mr L P KekanaGroup Chief Financial Officer

B.Com; MBL; ACMA – CIMA (UK)

Leadership

Executive Management

Mr R R MpeExecutive: Enterprise Development Finance

B.Com; Certificate in Taxation

Adv T I RakgoaleExecutive: Corporate Services

B.Juris; LLB; Diploma in Legal Drafting; Promotion of Administrative justice Act; Admitted as an Advocate


Mr M D MonakediExecutive: Trade and Investment Promotion

B.Juris; LLB

Mr M M MolepoHead: Land & Property Management

B.Comm; MBA; University of Limpopo

Ms M KekanaExecutive: Infomation, Knowledge and

Programme ManagementMasters of Management; MSC Management

Information Systems

Ms M C MokomaGroup Company Sectretary

B.Juris: University north West Strategic Project Management: College of Project Management / University of Pretoria

Authenticity through Ethical Leadership: UCT - Graduate School of Business Executive and

Management EducationPractical Labour Law: UCT

Mr K R NkadimengActing CEO: Corridor Mining

Resources BA (Hons in Development and

Management); BBibl

Mr M J ShirindaCEO: Risima Housing Finance Corporation

B.Admin- University of the northMBA degree - University of Limpopo

Mr M C NkoanaActing CEO: Great north Transport

Diploma in Management - Leicester University (UK).


Programme 1

Managing Director’s Office


BACKgrOunD

The purpose is:

• Providing strategic direction (what the organisation is all about, what the organisation stands for, whom the organisation supports and by what sort of means) and effective strategic management processes to ensure that the organisation is able to achieve its mandate.

• Effectively conducting ongoing and annual performance monitoring of programmes and introducing corrective measures as required, as well as distilling lessons from programme implementation.

• Positioning LEDA (via the structured platform of stakeholder partnership) as a brand in the province.

StrAtEgiC OBjECtivE: EffECtivE LEADErShiP

Strategic direction and overall support, management and administration will be provided.

StrAtEgiC OBjECtivE: fOrging StrAtEgiC PArtnErShiPS

Forge and manage strategic smart partnerships.

StrAtEgiC OBjECtivE: EnhAnCing COrPOrAtE gOvErnAnCE

Performance Management and Compliance reports produced.

PERfoRMANCE MEASURE/INDICAToRANNUAL TARgET

(2013/14)ACTUAL ANNUAL oUTPUT gAP REMARKS

1. Strategic Plan (SP) and APP developed 2 1 APP and 1 SP none none

2. Strategic partnerships forged and managed 16 17 strategic partnerships forged none none

3. Quarterly and Annual Reports produced 54 quarterly reports and 1 Annual Report produced

none none

4 Board support 16 36 instances of Board support none none


Programme 2

Enterprise Development and finance Division


BACKgrOunD

The Enterprise Development and Finance Division comprises three departments, namely Finance Support; Business Support; and Training and Development. The division’s main responsibility is to accelerate the development and sustainability of SMMEs and co-operatives, by ensuring that they create sustainable job opportunities in Limpopo.

The division provides an array of enterprise support programmes, such as:

• SMME and Co-operative Focus

• Mentoring and Coaching

• Incubation Services

• Co-operative Grant Funding

• Technical and Business Training.

These services are provided via a network of 30 branch offices and four technical training centres at district and local municipality level in Limpopo.

During the period under review, the division was tasked with the responsibility of ensuring that the policies and strategies that were in place were reviewed, in order to align them to the National Development Plan and the Industrial Policy Plan 2.

To this end, the new African Growth and Opportunities Act (AGOA) requires the Limpopo Employment and Growth Plan to be in line with AGOA policy and strategy documents. The division ensured that the activities undertaken were mainly to support SMMEs and co-operatives in creating sustainable job opportunities and, in particular, via enterprises and co-operatives in rural areas.

The Business Support Department continued partnering with the Limpopo Department of Education in executing the School Sanitation Programme. Via this partnership, 33 co-operatives created 260 direct employment opportunities, of which 48% were for youths and 63% were for women. It is divisional strategy to roll-out partnerships with other provincial government departments in order to ensure coordinated support for SMMEs and co-operatives.

During the period under review, the Business Support Department engaged with both provincial and local government to ensure that 70% of the provincial budget was targeted to support SMMEs and co-operatives in Limpopo. This advocacy work is still continuing.

The Finance Department continued to provide financial support to SMMEs. To this end, the department approved 119 business loans during the period under review. Of these, 91,5% were procurement loans, which constitute a worrying factor, since these are term loans rather than asset loans or expansion loans.

The department is currently reviewing its Credit Policy and Collection Strategy, with the view to developing new product offerings that are in line with national and provincial policies. The department is also negotiating and partnering with commercial and other development finance institutions with the aim of increasing the demand for expansion and asset finance loans.

The Training and Development Department continued with the provision of both technical and business support training to individuals, enterprises and co-operatives. The department trained 2 507 learners during the period under review, which was 149% above target. The performance above target was mainly due to a high demand from various stakeholders for both business and technical training. This actually implies that there should be strategies in place to ensure the allocation of resources to the department.

The Enterprise Development and Finance Division will continue to provide professional and quality programmes and services to SMMEs and co-operatives with the aim of ensuring the creation of sustainable job opportunities in Limpopo.


The purpose is to provide developmental loan finance to both new and existing businesses (SMMEs).

SuB-PrOgrAMME 2.1: EntErPriSE finAnCE

The purpose of this programme is to provide small, micro and medium enterprises (SMMEs) with development finance and assist them with job creation.

StrAtEgiC OBjECtivE

To provide enterprise development finance in mandated SMME sectors.

annual targets

Annual performance report (April 2013–March 2014)

PERfoRMANCE MEASURE/INDICAToR

ANNUAL TARgET (2013/14)

ACTUAL ANNUAL oUTPUT

gAP REMARKS

1.Asset finance (equipment & machinery

65 loans (average R250K)

R16.32 million3 loans R19.91 million (62 loans) R3.59 million

We received 20 applications in this category which could not be processed as a result of poor quality and declines at source. 1 loan amounting to R18.83 million was approved however the implementation was delayed. The loan will be implemented in the 2014/15 financial year

2.Bridging/Procurement finance

108 loans (average R250K)

R10.80 million

118 loans

(Average R101.94K)

R12.03 million

10 loans

R1.23 million

The surplus gap of 10 loans that were granted against the target of 108 reflects prioritization of this category of loans which allowed us to spread available funds to more clients

3. Working capital finance 49 loans (average R250K)

R12.34 million

8 loans

(Average R1.61 million)

R12.84 million

(41 loans)

R500k

1 loan amounting to R8.30 million was approved however the implementation was delayed. The loan will be implemented in the 2014/15 financial year

4.BEE Financing (Equity & Loans)

nil1 loan

R12.35 million

1 loan

R12.35 million

Loan not implemented awaiting approval from the MEC

6. Total Loans 222 loans R39.46 million

130 Loans approved (Average R159K)

R57.14 million

112 loans disbursed R14.95 million

Shortfall of 92 loans approved with a surplus value of R17.68 million

Shortfall on disbursement was 18 loans with a value of R42.19 million


SUB-PROGRAMME 2.2: ENTERPRISE DEVELOPMENT

The purpose is to contribute to economic growth via the development and support of co-operatives and SMMEs.

StrAtEgiC OBjECtivE

To increase developmental support to co-operatives and SMMEs.




gAP REMARKS

1. Co-operatives incubated 190 329 0 none

2. SMMEs supported 13 390 12 680 710Staff turnover and lack of resources resulted in the target not being achieved

3. SMMEs incubated 130 220 100Staff turnover and lack of resources resulted in the target not being achieved

SuB-PrOgrAMME 2.3: trAining DEvELOPMEnt

The purpose is to contribute towards the development of entrepreneurial technical skills.

StrAtEgiC OBjECtivE

To increase the technical and business training skill levels of existing and aspiring entrepreneurs.




gAP REMARKS

1. number of entrepreneurs technically skilled 2 118 2 507 none none

2. number of entrepreneurs provided with business skills 2 700 4 023 none none


Programme 3

industrialisation Division


3.1 Property ManagementBACKgrOunD

The purpose is to provide and manage the existing property portfolio in order to support economic development.

Limpopo Economic Development Agency (LEDA) has a portfolio of properties that is comprised of large and small industries as well as commercial and residential properties in rural areas of the province.

The performance of this Division is affected by economic factors, which impact on the movement of tenants and the contribution to job creation in the various sectors. The Strategic Industrial Infrastructure Division of LEDA was able to increase the tenants’ occupancy by 34 new tenants (151 new tenants moved in and 117 tenants out of our properties), during the current financial year.

The increase in tenants contributed to the 3 058 indirect new jobs created, (4 838 new jobs created and 1 780 old jobs lost) during the 2013/2014 financial year. This contributed to the improvement in the standard of living of people of Limpopo.

The aging properties within the portfolio pose a challenge of both a reputational and financial risk nature as they are falling apart. There is a need for a capital injection to maintain and refurbish some of our revenue generating properties, to enable us to compete in the property industry.

The Division collected a total of R80.17 million, of which R77.26 million (target R84.77 million) was current rental raised, and arrear rental collected was R2.91 million (target R5 m).

StrAtEgiC OBjECtivE

To provide infrastructure via industrial, commercial and residential property acquisitions and management.




gAP REMARKS

1.Maintain infrastructure and increase the number of tenants

20 new tenants 34 new tenants none none

Special Economic Zones

SEZs are a national programme for the promotion of industrialisation and regional economic development across South Africa. The programme offers incentives to attract investors to locate within the SEZ designated areas. The Division was, for the year under review, mandated to drive a process for the establishment of SEZs in the province, namely those in Musina and Tubatse.

Focus was, in the the two Limpopo SEZ areas, in the identification of and acquisition of land (underway) and feasibility studies projected to be completed by end October 2014. Clusters under consideration include logistics, manufacturing, agro-processing, energy and mineral beneficiation.


3.2 AgribusinessBACKgrOunD

LEDA Agribusiness Department that includes Venteco and Mununzwu subsidiaries, continues to make a vital contribution to rural economic development, job creation and food security for all people in Limpopo Province, through agro-processing value chain activities.

In accordance with LEDA’s industrialisation mandate to establish agro-processing facilities, the upgraded Lebowakgomo Abattoir is currently being positioned to operate at full capacity and it therefore is envisigaed to play a significant role in ensuring the placement of broiler houses to support emerging farmers in the poultry sector.

During the period under review, Mashashane Hatchery continued to service the market with quality day-old chicks. To this end, eight breeder farmers are benefiting by supplying eggs to the hatchery, which employs no less than 55 people.

The Venteco Tea Estate produces and sells value-added quality Midi black tea. On average, the estate employs 2 000 employees during peak time. Management and the Board of Directors are currently exploring other economic opportunities to mitigate the challenges of breaking into the tough and competitive black tea market. An extraction research project is underway on the estate, supported by the CSIR and the Limpopo Department of Agriculture.

At Makgoba land properties, the Mununzwu Tea Estate’s (Ganshoek and Middelkop) maintenance of the tea plantation is continuing, while the Board of Directors is engaging with relevant shareholders and businesses to consider other viable agribusiness opportunities.

In addition, the Agribusiness Division continued to support primary and secondary agricultural cooperatives during the period under review.

However, the Agribusiness Division was not able to fully realise its set targets during the period under review, mainly due to the implications of attempts to relocate its activities from LEDA to the Department of Agriculture. This also resulted in delays with regard to the processing of submissions required for the implementation of various programmes, with the result that these two projects have been reprioritised for implementation during 2014/15.

The purpose of the programme is to provide agribusiness opportunities and agricultural support in order to enhance economic development.


StrAtEgiC OBjECtivE

Improve the establishment of agribusinesses, agro-processing and value-adding facilities




gAP REMARKS

1number of hub projects developed and provided with inputs

4 2 2Funds were reprioritised to other projects

2.number of hatcheries and breeder houses expanded


3 number of pack-houses refurbished 8 0 8Projects were retracted by LDA

4number of fruit and vegetable processing facilities developed

1 0 1Projects were retracted by LDA

5 number of nguni livestock projects established 1 0 1Projects were retracted by LDA

6number of agribusiness and agro-processing business models reviewed



Programme 4

information, Knowledge and Programme Management Division


BACKgrOunD

This programme was previously known as Knowledge Economy (KE) and was comprised of the Information and Communication Technology (ICT) and Research and Development Departments. In December 2013, the ICT Department of the KE Division was transferred to the Department of Economic Development, Environment and Tourism. Since then the Division has been transformed to include internal ICT and Programme Management; and has been renamed Information, Knowledge and Programme Management. The added Programme Management component will assist LEDA to improve its programme planning, tracking and communication.

The mandate of the KE division was to transform the Province from a resource-based economy to a knowledge-based economy in line with LEDA strategy and to develop and manage ICT initiatives in Limpopo Province. The division seeks to implement a number of key projects such as an affordable secure shared open access broadband telecommunications infrastructure for government, businesses and civil society in general; develop ICT SMME’s and ICT human capacity and skills; and implement a range of ICT solutions in the areas of e-health, e-education etc aimed at transforming service delivery in the province. These projects will be implemented through partnerships with key stakeholder’s i.e. SOEs, HEIs, business.

Through its ICT Department, the division completed an Application Development Framework, Database Development Framework, E-services model and ICT SMME partnership model. The partnership model will provide a basis for partnering with and nurturing local ICT SMME’s. The property division was assisted with a GIS system to identify properties and with the development of maps for the SEZs programme. The division implemented a help desk system in the department of Economic Development, Environment and Tourism and piloted a web-based video conferencing system with SITA.

The Division signed MoU’s with various industry partners with the intention of strengthening the ICT sector in the Province. These include Microsoft, CISCO for establishment of Cisco academy and all public FETCs of the province. An assessment of all LEDA owned training centres across the Province was conducted with the view of preparing the sites to be used for ICT training in the next financial year. Through the division, LEDA is fully accredited by MICT SETA and together with the accreditation, received approval for four learning programmes viz. End user computing NQF level 3, System support NQF level 4, Systems development NQF level 4 and Technical support NQF level 5.

LEDA presented the Limpopo Province’s progress with regards to Free and Open Source Software at the national CIO Forum in Cape Town, Open Source Users Group of South Africa and at GovTech 2013 in Cape Town. The Open Resource Lab was hailed as an important support structure for the progress on Open Source. Three departments and SITA interns were trained on Open Source Technology.

The division continuously provided a proactive research and development service and conducted market and economic reviews to enable LEDA to continuously follow economic trends and their impact in the province. Key investments into the Province were tracked on a quarterly basis.

SuB-PrOgrAMME: 4.1: iCt infrAStruCturE

The purpose is to establish a secure, shared, affordable and open access broadband wide area network (WAN) infrastructure footprint, in line with identified growth points.

Strategic objective: Establish and expand an affordable shared broadband open access wide area network (WAN) infrastructure.




gAP REMARKS

1.

To establish a shared provincial open access broadband wide area network (WAn)

Feasibility study into broadband to be conducted

Service provider to do feasibility study not appointed

Feasibility study not conducted

The RFP’s decision to appoint a service provider was not adjudicated and the programme was relocated to LEDET during the third quarter


Programme 5

trade and investment Promotion Division


BACKgrOunD

LEDA’s Investment Promotion subdivision focuses its activities mainly on the facilitation of Foreign Direct Investment (FDI) in Limpopo, as well as on the promotion of value-added exports from the Province to the rest of the world.

5.1 invEStMEnt PrOMOtiOn

LEDA had set an annual target of R1.8bn to facilitate investment in the 2013/2014 financial year. During the period under review, the division facilitated R1.850bn worth of investments across the province.

Investment projects realised

Alternative energy investment projects

During the period under review, mining and green energy projects were successfully facilitated. They are now due for implementation in the province. These projects will contribute to Gross Domestic Product (GDP) growth and job creation in Limpopo.

Other investment projects identified

Several projects were identified in the normal course of investment facilitation during the period under review and are now due for implementation in the province. They include the following:

• The Musina Waste Water Treatment Plant – an investment project proposed within the Special Economic Zone (SEZ).

• The Waterberg Rail Expansion Project, in conjunction with the Development Bank of Southern Africa (DBSA), which is due for implementation as part of the Presidential Infrastructure Projects in the Waterberg coal-fields of Lephalale, which are linked to the Botswana, Thabazimbi and Witbank collieries.

• A coking coal plant within the Special Economic Zone scope.

5.2 trADE AnD EXPOrt DEvELOPMEnt

With regard to trade promotion, the division achieved exports to the value of R158.540 million, against a target of R130 million, much of which represented contributions by black-owned enterprises. Approximately 150 companies across various sectors were exposed to export awareness. Fifty companies were trained in export International Commercial Terms (Incoterms) Rules. One company received mentoring by international experts from Programma Uitzerding Manager, Limpopo’s strategic partners based in the Netherlands.


Investment missions undertaken during the period under review

MISSIoN CoUNTRY PURPoSE oUTCoMES

Investment recruitment mission to the People’s Province of Henan

People’s Republic of China

Participation in the CCPIT Investment Conference and a reciprocal visit to Henan, servicing the MoU between Limpopo and the Henan Province.

An investment company from Henan, Henan Guoji Industries, committed to doing business in real estate and property development in Limpopo.

Follow-up mission to India India

Follow-up with Coal India Limited (CIL) to conclude a Memorandum of Agreement (MoA) with Limpopo pertaining to coal mining in the province.

A conclusion to sign off the MoA was reached and dates set for February 2014.

Africa Down Under Mining Conference

Australia

Participation in the Africa Down Under Mining Conference in Perth, as well as the Africa-Australia Business Council (AABC) Conference in Melbourne

A revitalisation of the relationship between LEDA and the AABC was realised.

PDAC Convention in Canada Canada

Participation in the PDAC Convention and a follow-up on a meeting, held in Cape Town, for exposition of Limpopo’s prospecting permit holders within the PDAC convention.

Identification of new and existing investment projects by Canadians in Limpopo, in sectors such as:

• Gold

• Platinum Group Metals.

Interest from investors to explore additional opportunities for business in the province.

Trade missions undertaken

MISSIoN/ExHIBITIoN CoUNTRYNUMBER AND NATURE of CoMPANIES

ToTAL BLACK WHITE

Ghana/Benin Outward Selling mission Ghana and Benin 5 5 0 100% black

Africa‘s Big Seven South Africa 13 11 2 84% black

Jo’burg Art Fair South Africa 4 4 0 100% black

Food Wine and Design South Africa 7 5 2 80% black

Rand Easter Show South Africa 2 0 0 100% black

AF- L’ARTIGIAnO In FIERA Italy 1 1 0 100% black

Indonesia Outward Selling Mission Indonesia 3 0 0 100% black

Zimbabwe International Trade Fair 2013 Zimbabwe 1 1 0 100% black

Fruit Logistics 2014 Germany 3 2 1 66% black

Gulf Food 2014 Dubai 2 1 1 50% black

Poland Outward Selling Mission Poland 2 2 0 100% black


The purpose is to promote investment opportunities and create new markets.

Strategic objective: Promotion of investment opportunities and market access.

Strategic objective: Promotion of broad-based economic empowerment in LEDA-promoted projects.




gAP REMARKS

1Investment opportunities identified

8 new investment opportunities identified

10 new investment opportunities identified

none none

2. Increased investments R1.7 billion R650 million R 1.05 billion

Delay in finalising the implementation of the investment pipeline. Planned to invest in some projects during the first quarter of the new financial year

3 Increased exports R130 million R158.618 million none none

4Investment and export reports produced

8 10 none none

5Infrastructure projects and services promoted

Promote 5 infrastructure and service projects

Promoted 5 infrastructure and service projects

none none

6

Increased black economic empowerment participation in LEDA-promoted projects

26% 53% none none


Programme 6

SubsidiariesgREAT NoRTH TRANSPoRT

RISIMA HoUSINg fINANCE CoRPoRATIoN

CoRRIDoR MININg RESoURCES

VENTECo

MUNUNZWU


6.1 risima housing and finance CorporationRisima is a 100% wholly owned subsidiary of LEDA. It was specifically established for the purpose of giving effect to Section 3(1) of the Limpopo Development Corporation Act No. 5 of 1994 as amended (LDCA) which requires that LEDA amongst other objects should, “encourage, plan, finance, coordinate, promote and carry-out, either directly or indirectly, the development of the province and its people, in fields including the areas of housing, economic and community development.

The company is making housing finance accessible and affordable for the low to middle income households including deep rural areas of Limpopo. We are aware that one of our challenges is the ever-changing housing finance market and economic landscape that may contradict our plans due to limitation of capital resource but yet housing remains the biggest challenge in the country to be addressed by institutions like Risima.

The biggest stumbling block to home ownership for most people is affordability and impaired credit records. However, due to our developmental mandate we are best placed to resolve these bottlenecks in the delivery of housing finance. The company will remain vigilant in monitoring the housing landscape in order to ensure that we are aware of strategic issues and opportunities in the new plans of partnerships in property development and other activities. The year under review also saw the company taking further steps towards becoming visible in order to offer geographically spread services in accordance with provincial growth areas in all the regions and also cater for clients’ particular needs.

Through funds generated by the company’s own cash flow, 136 households were assisted to acquire houses of their choice and in the process this represented an investment totalling R64 million. The company made a profit of R16 808 595 in the year under review, compared to R9 115 013 in the previous reporting period. Due to a buoyant demand for home loans, Risima’s total loan book grew, despite funding constraints from R269 177 589 (previous year) to R298 228 247 during the year under review. Looking forward, the company’s annual financial statements are prepared and presented on a going concern basis and there are no risks that may stop the company for the foreseeable future to operate.

SuB-PrOgrAMME 6.1: riSiMA hOuSing finAnCE COrPOrAtiOn

The purpose of Risima Housing Finance Corporation is to create access to housing finance in order to accelerate home - ownership in both rural and urban areas, creating shareholder value and developmental philosophy of creating job opportunities to the people of Limpopo.

StrAtEgiC OBjECtivE

To facilitate housing development in both rural and urban areas, focused on increased and sustained delivery of housing through home loan finance in order to improve the quality of life in the Province.




gAP REMARKS

1. Housing DeliveryApprove 145 home loans @ R300 000 (R43.5m total)

R64.0m

The company recorded a positive variance of R20.5 million for the year under review

The positive variance can be attributed to increase home loan activities and internal efficiency

1. Housing DeliveryGrant 145 home Loans

136Financed 9 home loans below target for the for the year under review

The negative variance is due to price escalation of properties and the halt of intake of new applications due to financial constraints.


6.2 Corridor Mining ResourcesCorporate Strategy A 5 year Corporate Strategy document has been developed for CMR.

Company’s Act CMR and its subsidiaries are in compliance with the Company’s Act.

Risk A risk register of the top risks for CMR was developed and is being continuously monitored to mitigate risks.

MPRDA All CMR subsidiary companies are in compliant with the Act and the respective Boards strives to continue compliance to the Act.

invEStMEntS in Mining OPPOrtunitiES

An investment into identified mining opportunities of R13.6m was achieved against a target of R67m.

rightS AnD LiCEnSing

Applications for mining rights on our two launch projects, Fumani Greenstone Gold Mine and Sefateng Chrome Mine, were accepted by the Department of Minerals Resources (DMR) and Environmental Studies commenced during the year under review. Three mining permits on the Zwartkoppies farm portion of Sefateng Chrome Mine were expedited and mining commenced until the expiry of the mining permits. CMR’s application for three mining permits for Tshepong Chrome Mine was accepted.

tEChniCAL infOrMAtiOn

Specialist studies for Environmental Impact Assessment (EIA) commenced during the year under review for Fumani Greenstone Gold Mine and Sefateng Chrome Mine projects. Conceptual drilling on the Rock Island Gold Mine project was also completed and show the existence of gold mineralisation.

Mining COMMunitiES

Communities at Fumani Greenstone Gold Mine and Sefateng Chrome Mine were assisted in establishing and registering Community Trusts to house community shares in the projects. Engagements with all other communities continue to take place for establishing Community Trusts where affected communities are shareholders in our projects.

SUB-PROGRAMME 6.2: CORRIDOR MINING RESOURCES (CMR)

The purpose is to identify and participate in mining ventures in order to encourage SMME development in the sector.

StrAtEgiC OBjECtivE

To increase Investment in mining opportunities.




gAP REMARKS

1. Amount invested in mining opportunities

Mobilisation of investment with a total capex of R67 million

R15.8 million reflects LEDA contribution without external funding resources

R51.2 million

The company could not raise funds as planned/intended, due to a moratorium on disposals by the DMR.


6.3 gnt Performance OverviewDuring 2013/2014 and in the face of a negative global economic climate Great North Transport (GNT) succeeded in achieving passenger growth and an increase in revenue when compared with the previous financial year. However due to a significant increase in the cost of operations, the company ended the financial year having recorded a loss of just over 5 million rand. This is a significant improvement from the previous financial year (2012/2013) where the company recorded a loss of over R 15 million.

The Board also continued to ensure that GNT remains an equal opportunity organisation for all staff levels. Under our leadership GNT employed fifty (50) new female drivers and signed on twenty Audit Interns as part of the intake of trainees that benefit from our skills development programme.

ECOnOMiC rEviEw

A total of 524 buses operated through the villages, towns and farms within our operational area, transporting between residential, workplaces and other locations. The volume of commuters conveyed continued to grow even though the profits were compromised due to increasingly rising running costs. The company managed to transport 31 million passengers as opposed to 35 million passengers conveyed the previous financial year. This was attributable to a one month strike during May 2013. Our drivers remained committed and provided an excellent customer services.

Equally and significantly so, GNT continued to be the biggest player in the bus sector in the province ensuring a safe, reliable and affordable means of mobility to our poor communities, therefore contributing also largely in the gross domestic product of the province. During the year under review Great North Transport operated less than 87 busses for public good (not subsidies).


20 yEAr MiLEStOnES fOr grEAt nOrth trAnSPOrt

• Successfully merge three bus companies (Lebowa, Gazankulu and Far North Bus Services) to form Great North Transport.

• One of the first few companies to successfully operate interim and negotiated contracts in South Africa.

• We have empowered more than five (5) small bus operators in Limpopo namely: Kopano, Mathole Bus Services (MBS), Risaba Bus Services, Madodi, John Hlungwane (Malamulele Transport) and Bahwaduba.

• Mr Makeke (Bapedi Depot) represented South Africa in Italy in 2009 after wining Driver of the Year competitions.

• We enter the Driver of the Year competition annually and our drivers feature amongst the top three in the country.

• We have successfully trained more than 40 Internal Auditor interns in the last five years.

• We have expanded our services to Southern Africa namely: Zimbabwe.

• Trained over 60 female drivers.

• We run an annual learnership program with an intake of 20.

• Expand bus service coverage within Limpopo and part of Mpumalanga.

• Increased our fleet size from 410 in 2004 to 540 in 2009.

• Great North Transport is the sixth biggest bus companies in terms of fleet size in South Africa.

• We transport more than 35 million passengers per annum.

• Travelling more than 36 million kilometers per annum.

• One of Biggest employers in Limpopo Province employing for more than 1255 employees.

• One of the few companies with a turnover of more than R 500 million. Therefore contributing significantly to the GDP of the province.

• Our contribution to SMME’s in the province is around 30%.

• We operate two unsubsidised depots namely: Phalaborwa and Bapedi in Burgersfort.

• We transport the poorest of the poor in the province as we move people from deep rural villages to their place of employment in towns.

SuB-PrOgrAMME 6.3: grEAt nOrth trAnSPOrt (gnt)

The purpose is to provide a sustainable, affordable, reliable and safe passenger transport service by operating a standardised bus fleet, to identify opportunities and participate in passenger transport ventures.

StrAtEgiC OBjECtivE

To provide public passenger transport




gAP REMARKS

1. number of passengers transported 37 million 32.65 million4.35 million

Operated with fewer buses than originally planned. Using 524 busses as opposed to 537. There was a driver strike during the first quarter


Programme 7

financial Management


The purpose is to ensure financial sustainability.

SuB-PrOgrAMME: 7.1: finAnCE

The purpose is to provide overall financial management support to the institution.

StrAtEgiC OBjECtivE

Ensuring financial sustainability of the LEDA Group



ACTUAL ANNUAL oUTPUT gAP REMARKS

1number of budget submissions to Treasury

1 2 none none

2number of monthly financial reports submitted

12 12 0 none

3

number of Annual Financial Statements submitted to the Executive Authority, the Treasury and the Auditor-General, in accordance with PFMA requirements

1 1 none none

4number of unqualified audit reports from Auditor-General

1 0 1

Qualified audit report for the 2012/13 financial year

SuB-PrOgrAMME: 7.2: infOrMAtiOn tEChnOLOgy

StrAtEgiC OBjECtivE

To provide a secure, stable and compliant IT environment.


ANNUAL TARgET (2013/14) ACTUAL ANNUAL oUTPUT gAP REMARKS

1Provide reliable information and stable systems

Stabilise servers and achieve 99% uptime. Maintain and ensure availability of systems

Achieved 99% uptime none none

2IT governance framework reviewed and implemented

Review and implement IT governance framework

Reviewed and implemented IT governance framework

none none

3Software licenses renewed and software updates performed

10 software licenses renewed and software updates performed

10 software licenses renewed and software updates performed

none none


Programme 8

internal Audit


BACKgrOunD

Group Internal Audit is strategically positioned within the Group. It reports functionally to the Board Audit and Risk Committee and administratively to the Managing Director. We provide assurance and consulting services to Management and the Board on issues relating to Governance, internal controls and risk management assurance. We have adopted an integrated risk based methodology in our assurance activities and act as a third line of defense.

our strategic focus

• To provide independent, timely, adequate, responsive and value adding assurance and advisory service to stakeholders;

• To develop and maintain adequate, competent and objective internal audit staff that is in compliance with International Professional Practice Framework (IPPF);

• To maintain and enhance professional working relationships with the stakeholders;

• To assist LEDA to maintain effective Governance, Risk Management and Control Process; and

• To establish and maintain an accountable and efficient internal audit activity.

The purpose is to ensure internal control and a compliant environment.

StrAtEgiC OBjECtivE

To ensure good compliance.




gAP REMARKS

1Audit findings implemented and monitored

100%72% of audit findings tracked

28%

Increased special requests. Prioritisation of high-risk areas. Low-risk areas project will be reviewed by the Audit and Risk committee for consideration in the 2014/15 Annual Performance Plan

2Annual audit plan implemented

100%Implemented 80% of the approved audit plan

20%Projects deferred to 2014/15 financial year due to increased special requests


Programme 9

Corporate Services Division


9.1 human resourcesBaCkGround

The Human Resource Department’s main focus during the period under review, was the amalgamation process. The objective of the process was to ensure that proper organisational structures, staff consultation processes and workforce transitioning processes were in place for the amalgamation of the four entities.

The focal areas were the following:

• Determining staff members’ Conditions of Service in the new company.

• Gathering the former public entities’ HR policies and consolidating them into one policy for the new company.

• Determining the staff transitioning approach.

• Compiling and updating the staff database with a view to accurate transitioning.

• Transferring HR files to the new entity.

• Developing and supporting the implementation of the Placement Policy.

• Consolidating the payroll and payment from one paypoint.

• Consulting with unions on the transitioning approach and procedures.

• Signing off the Placement Report on the placement of employees, in conjunction with union representatives from the Bargaining Unit.

• Integrating and implementing an Employee Wellness Programme to support staff members and their families.

• Designing new guidelines for the implementation of a Performance Management System for all LEDA members of staff.

The above focal areas were attained and staff transitioning to the Limpopo Economic Development Agency (LEDA) happened smoothly. The focus of Human Resources during the post-amalgamation period will be on ensuring that LEDA cultivates a high-performance culture at all levels.

The purpose is to provide corporate service management support to LEDA.

SuB-PrOgrAMME 9.1: huMAn rESOurCES

The purpose is to maintain a fair, reliable and positive work environment for all employees, in support of LEDA’s mission.

StrAtEgiC OBjECtivE

To be a strategic partner that provides effective HR advisory and support services to LEDA and its subsidiaries



1 % of staff placed 95% of staff placed Placed 95% (403) of staff none none

2% of staff on Performance Management System (PMS)

100% of staff on PMS100% LEDA employees are on PMS

none none




3Achieve 80% of EE compliance

Achieve 80% of EE compliance

Achieved 70% 10%

Vacant positions will be targeted for balancing equities as per EE imperatives

4 % of staff trained Train 100% of staff Trained 30% of staff 70%Delayed placement of staff impacted on training

5Reach 100% of staff with Wellness and EAP Programme

Reach 100% of staff with Wellness and EAP Programme

Reached 100% of staff with Wellness and EAP Programme

None None

6Number of OHS inspections

4 OHS inspections 4 OHS inspections conducted in all regions

None None

7Number of consultative meetings

10 consultative meetings

12 consultative meetings

None None

8Accuracy of payroll information

Pay accurate salaries on time

Paid accurate salaries on time, with the exception of the duplicate bonuses paid to 29 former TIL employees

Due to different systems carried over onto one payroll. Money has since been recovered from those employees


9.2 Administration and LogisticsSuB PrOgrAMME 9.2: ADMiniStrAtiOn AnD LOgiStiCS

The purpose is to provide logistical support and sound management of resources to ensure the achievement of LEDA’s strategic objectives and financial sustainability.

StrAtEgiC OBjECtivE

To provide logistical support for the smooth running of LEDA and its subsidiaries, as well as optimal use of mobile assets.



1Allocation of resources and safety of assets

Provide security services to the LEDA Group

Security services provided to LEDA group

none none

2 Security of documentsRecords management for all LEDA divisions

Records for all LEDA divisions scanned

none none

9.3 Legal ServicesSuB-PrOgrAMME 9.3: LEgAL SErviCES

The purpose is to provide efficient and effective legal support services to LEDA and its subsidiaries, in order to ensure regulatory compliance and safeguard LEDA’s interests.

StrAtEgiC OBjECtivE

To improve the quality and accessibility of legal services while achieving maximum cost-effectiveness and ensuring that LEDA’s interests are protected in all instances.



10% percent or fewer actions taken against LEDA on non-compliance

Legal compliance100% legal compliance assured

None None

2

0% or fewer legal actions instituted against LEDA.Less money spent on legal matters

Contract management100% of submitted contracts were validated

None None

3High success rate is achieved when instituting legal action

Litigation managementLesser amount spent on litigation than during the previous year

None None

4Compliance with legislative prescripts is realised

Legal debt collection77% of referred legal debts were processed

None None


9.4 Marketing and CommunicationsOvErArChing StrAtEgiC intErvEntiOnS

The Marketing and Communications Business Unit is the organization’s delivery instrument on both internal and external multi-media platforms. The unit provides corporate communications, branding and stakeholder relations to all business units across the LEDA value chain: to achieve consistency in content messaging, campaigns and, stakeholder relations.

The Division has largely focused on the development and soft activation of the LEDA corporate brand – following the merger of four institutions into a singular economic development agency. Key to this was the production of an organisational brand manual that articulates and governs correct application of the corporate identity, for and external use. This was further enhanced by the production of corporate marketing and communications / branding material such as banners, corporate gifts, a new website, as well as rebranding of LEDA offices and fleet (approximately 40 vehicles) to reflect the new brand identity.

COntEnt MAnAgEMEnt

The merger of the four entities: Trade and Investment Limpopo, Limpopo Business Support Agency, and Limpopo Agricultural Development Corporation and former LimDev to form LEDA has resulted in a fusion of previously autonomous economic development mandates assigned to these agencies by the shareholder – the provincial Department of Economic Development, Environment and Tourism (LEDET). The Division was, therefore, instrumental in managing the integration of corporate communications pertaining to programmes undertaken under these institutions – resulting in trade and investment promotion, agribusiness, enterprise development finance and knowledge economy being streamlined under an umbrella LEDA brand.

Also pertinent was the corporate communications support extended to Corridor Mining Resources, Risima Housing Finance Corporation, and Great North Transport – as wholly owned LEDA subsidiary companies. Communications focused not only on public relations – but on ensuring coherent alignment in how core programmes in each subsidiary company reflect and support the overall LEDA corporate strategy.

This, the alignment of subsidiary business activities to reflect overall LEDA business trajectory, for instance, included branding and publications support to the subsidiary companies – mainly on their stakeholder engagement commitments.

SPECifiC PrOgrAMMES:

Brand activation Events

In getting the LEDA brand off the ground – the Division focused mainly on brand activation outreach campaigns and events in selected district municipalities. The LEDA brand and corporate strategy was shared with economic development persons in local and district municipalities, corporate companies, national and provincial business chambers, the media fraternity, as well as other government departments and development finance institutions.

annual report

A Limpopo Economic Development Agency Annual Report was published.

LEda Website

A new LEDA interactive web portal – that integrates all the organisational programmes and activities has been developed and activated during the financial year under review. The portal, also aimed at positioning Limpopo to potential investors locally, within SADC and the wider African continent and in foreign markets – also connects such interest groups to key South African policy and nation brand institutions such as BrandSA, the departments of Trade and Industry (the dti), International Relations and Cooperation (DIRCO). This was /


The development of the LEDA corporate brand has been a priority for the division during the year under review.

Key to this was the production of an organisational brand manual that articulates and governs correct application of the corporate identity, for and external use.

One of the Division’s priorities was to brand all LEDA associated buildings with the new identity.

A new LEDA interactive website – that integrates all the organisational programmes and activities has been developed and activated during the financial year under review.

The website is also aimed at positioning Limpopo to potential local investors, as well as investors within SADC, the wider African continent and foreign markets.


is with a view of providing investors, current and potential stakeholders with an overarching view of the South African policy and brand articulation pillars.

Provincial Calendar Events

The Division was, from time to time, also central in the planning, project management and execution of provincial calendar events – as instructed or in support of the Department of Economic Development, Environment and Tourism (LEDET) or the Office of the Premier. These included stakeholder engagement events such as the Premier’s Gala Dinners, Marula and Mapungubwe Festivals, budget speeches, and so on.

SuB-PrOgrAMME 9.4: MArKEting AnD COMMuniCAtiOnS

The purpose is to develop and enhance LEDA’s corporate image and brand visibility.

Strategic objective: To promote the image and products of the LEDA Group, in order to ensure brand prominence and competitive market positioning.




gAP REMARKS

1Number of events to market and position LEDA

8 events to enhance corporate image and brand visibility

19 events to enhance corporate image and brand visibility

None None

2

Number of effective electronic, broadcast and print communication instances of coverage

12 electronic and broadcast instances of coverage



Still building on the LEDA brand after amalgamation

4 LEDA newsletters No newsletter 4 newsletters

Delays in designing a new format newsletter post-amalgamation

3. Annual Report 1 Annual Report 1 Annual Report None None

The development of the LEDA corporate brand has been a priority for the division.

The new identity was further enhanced by the production of corporate marketing and communications / branding material such as banners, corporate gifts, a new website, as well as rebranding of LEDA offices and fleet to reflect the new brand ID.


Board Meeting Attendance


infOrMAtiOn On BOArD MEMBErS

PrEvIouS Board

Board member – Appointed from 1 January 2013 – Resigned 25 July 2013

Mr M A Madzivhandila

Ms H B Khan

Ms V M Mothema

Mr T C Luvhani

Mr M E Maluleke

Ms O M M Moganedi

Ms D M Lerutla

Mr S R Monakedi

Mr T C Mhlaba

Mr D S Simelane

Ms M M A Mosidi

CurrEnt Board

Board member – Interim members appointed from 28 August 2013

Mr M. Lekota

Mr D. Kourtoumbellides

Mr S V Chepape

Mr S.C Nkadimeng

Ms K. Maroga

Mr M. Maphutha

Ms M.A Mphahlele

Mr L. Masia – Managing Director


1. BOArD AnD BOArD COMMittEE MEEtingS

1.1 Board MEEtInGS

The record of attendance by each member at LEDA ordinary Board meetings for the period under review is set out in the table below:

until 25 July 2013

NAME 17/05/2014

Mr M A Madzivhandila (Chairman)

Ms H B Khan (Deputy Chair)

Ms V M Mothema

Mr T C Luvhani

Mr M E Maluleke

Ms O M M Moganedi

Ms D M Lerutla

Mr S R Monakedi

Mr T C Mhlaba

Mr D S Simelane

Ms M M A Mosidi

From 28 august 2013

NAME 30/08/2013 13/09/2013 30/09/2013 31/10/2013 1/11/2013 9/12/2013 12/02/2014 27/02/2014

Mr M. Lekota (Chairman)

Mr D. Kourtoumbellides (Deputy Chair)

Mr S V Chepape

Mr S.C nkadimeng

Ms K. Maroga

Ms M.A Mphahlele

1.2 GrouP Board audIt and rISk CoMMIttEE MEEtInGS

until 25 July 2013

NAME 27/05/2013 30/05/2013

Ms D n Lerutla (Chair)

Mr T C Luvhani

Mr M Mosidi


From 28 august 2013

NAME 1/10/2013 3/12/2013 17/03/2014

Ms K. Maroga (Chair)

Mr S.C nkadimeng

Mr. M. Ralebipi

1.3 Board HuMan rESourCES and rEMunEratIon CoMMIttEE MEEtInGS

From 28 august 2013

NAME 27/09/2013 14/10/2013 18/10/2013 15/11/2013 29/11/2013 5/03/2014

Ms M.A Mphahlele (Chair)

Mr S.C nkadimeng

Mr M. Maphutha

1.4 Board ProCurEMEnt CoMMIttEE

until 25 July 2013

NAME 4/07/2013

Ms M Mosidi (Chair)

Mr T C Mhlaba

Ms M V Mothema

From 28 august 2013

NAME 27/09/2013 28/11/2013 5/03/2014

Mr D Kourtoumbellides (Chair)

Mr S V Chepape

Mr M Maphutha

1.5 Board CrEdIt & InvEStMEnt CoMMIttEE

until 25 July 2013

NAME 4/07/2013

Ms H B Khan (Chair)

Mr M E Maluleke

Ms M V Mothema

From 28 august 2013

NAME 27/09/2013 28/11/2013 5/12/2013 5/03/2014

Mr D Kourtoumbellides (Chair)

Mr S V Chepape

Mr M Maphutha


CONTENTSGeneral Information 55

Report of the Audit and Risk Committee 56

Directors’ Responsibilities and Approval 59

Directors’ Report 60

Company Secretary’s Certification 62

Auditor-General’s Report 63

Statement of Financial Position 70

Statement of Profit or Loss and Other Comprehensive Income 72

Statement of Changes in Equity 73

Statement of Cash Flows 75

Accounting Poilicies 76

notes to the Annual Financial Statements 95

FINANCIAL



general information

Country of incorporation and domicile South Africa

nature of business and principal activities

Financing, Development, Business and Financial Manage-ment Support of Small and Medium Enterprises, Public Transport, Rental of Properties, Housing Finance, Mining and Exploration, Agriculture, Export Promotion and Investment Attraction in Limpopo.

directors

Mr M Lekota (Chairman)Mr D Kourtoumbellides (Deputy Chairman) Mr SV ChepapeMr SC NkadimengMs K MarogaMr M MaphuthaMs MA MphahleleMr L Masia (Managing Director)

registered office

Enterprise Development HouseMain RoadLebowakgomo0737

Business address

Enterprise Development HouseMain RoadLebowakgomo0737

Postal addressP.O. Box 760Lebowakgomo0737

Holding entityLimpopo Department of Economic Development, Environ-ment and Tourism (LEDET)

Bankers ABSA Bank Limited

auditor Auditor-General of South Africa

Secretary Ms MC Mokoma

Level of assuranceThese consolidated annual financial statements have been audited in compliance with the applicable requirements of the Public Audit Act of South Africa, 2004 (Act 25 of 2011).

Preparer

The consolidated annual financial statements were inter-nally compiled by:

Mr LP Kekana - ACMA - CIMA (UK) Group Chief Finance Officer

Published 31 May 2014

rounding Rounding to the nearest Rand has been applied.


report of the Audit and risk Committee

The objective of this Committee is to assist the Board in discharging its duties in relation to the safeguarding of assets of the Agency, adequate control systems, compliance and the preparation of accurate financial reporting and statements in compliance with applicable accounting standards.

1. ChArtEr

The Board’s Risk and Audit Committee is guided by the detailed charter that is reviewed and approved by the Board on annual basis. The Committee has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.

2. PurPOSE

The committee’s purpose and responsibilities arise from the Public Finance Management Act of 1999; Section 76 (4) (d) and Treasury Regulations 27.1.10. In performing its responsibilities the Committee has reviewed the following:

• Theeffectivenessoftheinternalcontrolsystems;

• TheeffectivenessoftheInternalAuditfunction;

• Theriskareasofoperationstobecoveredinthescopeoftheinternalandexternalaudits;

• Theadequacy,reliabilityandaccuracyoffinancialinformationprovidedtomanagementandotherusersof such information;

• Theaccountingandauditingconcernsidentifiedasaresultofinternalorexternalaudits;

• Compliancewithapplicablelegalandregulatoryprovisions;

• Theactivitiesof the internalaudit function, including itsannualworkprogram,coordinationwiththeexternal auditors, the reports of significant investigations and the responses of management to specific recommendations; and

• Theindependenceandobjectivityoftheexternalauditors.

3. MEMBErShiP

NAME of MEMBERS QUALIfICATIoN APPoINTED

Ms DM Lerutla CFA Charter holderBachelor Business Science (Hons)

January to July 2013

Mr TC Luvhani B.Com (Hons)MBA, CAIB (SA)

January to July 2013

Ms M Mosidi B.Com, Diploma in Education January to July 2013

Ms K Maroga CA (SA) September 2013

Mr SC nkadimeng B.JurisMasters in Public Administration

September 2013

Mr M Ralebipi B.Com (Acc), HigherDiploma Computer Auditing

September 2013


The Committee members were appointed by the Board of Directors and the committee comprises of at least three non-executive members. The Committee consists of the members listed hereunder and should meet at least quarterly as per the approved Charter. During the financial year 4 meetings were held.

4. intErnAL AuDit

The Committee considered and recommended the Internal Audit charter for approval to the Board and approved the annual work plan for the Internal Audit function. The Internal Audit function is responsible for reviewing and providing assurance on the adequacy of the internal control environment across operations. The Internal Auditor is responsible for reporting the findings of the internal audit work against the agreed audit plan to the Committee on a quarterly basis.

The Internal Auditor has direct access to the Committee, primarily through its Chairman. The Committee is also responsible for the assessment of the performance of the Internal Audit function.

The Internal Audit function is in-house and had the necessary resources, budget, and authority within the organization to enable it to discharge its functions. The Internal Auditor reports functionally to the Committee.

We are satisfied that the Internal Audit function is operating effectively and that it has addressed the risks pertinent to the company in its audits. We believe Internal Audit has contributed to the improvement of Internal Audit has contributed to the improvement of internal controls within the company.

5. EXtErnAL AuDitOrS

The Committee, in consultation with Executive Management, agreed to the engagement letter, terms, nature and scope of the external audit plan as presented by the AGSA. We have reviewed the AGSA Strategic Audit Plan for the 2013/14 financial year and have recommended approval of their budget to the board of directors. The Committee has satisfied itself that the AGSA exercised their duties in an independent and objective manner.

6. intErnAL COntrOL EffECtivEnESS

The Committee is satisfied that a system of internal controls has been put in place and that these controls have functioned effectively during the period under review. The Committee considers the system of internal controls appropriate in all material respects to;

• Reduceriskstoanacceptablelevel;

• Meetthebusinessobjectives;

• Ensureassetsareadequatelysafeguarded;and

• Ensurethattransactionsundertakenarerecordedintheaccountingrecords.

Internal Audit provides the Committee with assurance that internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various reports of the internal auditors, we noted that no matters were reported that indicate any material deficiencies in the system of internal control or any deviations therefrom.

It was noted that no significant or material non-compliance with prescribed policies and procedures has been reported.

Accordingly, we can report that the system of internal controls for the period under review was efficient and effective.


7. COrPOrAtE gOvErnAnCE

We are of the opinion that the company continues to strive towards complying with sound principles of corporate governance.

As per our discussions with management, management confirms that the content and quality of monthly and quarterly reports prepared and issued by the Managing Director during the year under review were properly formulated and have complied with the PFMA in this regard. The Committee is in the process of reviewing its corporate governance practices with a view to complying with the requirements of the 2008 Companies Act and King III recommendations.

8. riSK MAnAgEMEnt

The Board assigned the oversight of the risk management function to the Committee. The company developed a risk management strategy and policy which includes the fraud detection and prevention plan and policy. A formal risk assessment was undertaken for 2013/14 with quarterly reviews, updates and reports. Consequently, Internal Audit used this assessment to prepare the 3 year rolling strategic plan and the annual operating audit plan. The Committee monitored the significant risks faced by the company through reviewing risk reporting. We are satisfied that significant risks were managed to an acceptable level. The entity has appointed a Chief Risk Officer to ensure that Risk Management is dealt with appropriately. This position reports functionally to the Chairman of the Board Risk and Audit Committee.

9. AnnuAL finAnCiAL StAtEMEntS

The Committee has:

• Reviewedanddiscussedwithmanagement theauditedannualfinancialstatements, included in theintegrated report.

• Reviewedanddiscussedwithmanagementtheauditedperformanceinformation.

• Reviewedtheexternalauditor’smanagementletterandmanagementresponsesthereto,andreceivedconsidered reports from the internal auditors.

• TheCommitteehasnotedtheimprovementsmade.Theirregular,fruitlessandwastefulexpenditurefor2012/13. These have been cleared.

• TheCommitteecontinuestoinstituteremedialmeasuresinordertopromptlyaddresstheexternalauditfunctions and endeavours to effect improvement in the finance and procurement environment.

The Committee concurs and accepts the AGSA’s conclusions on the annual financial statements, and is of the opinion that the audited financial statements be accepted and read together with the report of the AGSA.

Ms k. Maroga C.a. (Sa)Audit Committee ChairmanLebowakgomo31 May 2014


Directors’ responsibilities and Approval

The directors are required in terms of the Limpopo Development Corporations Act, Companies Act No. 71 of 2008 and Public Finance Management Act No. 1 of 1999 (PFMA) to maintain adequate accounting records and are responsible for the content and integrity of the consolidated annual financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated annual financial statements fairly present the state of affairs of the group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with South African Statements of Generally Accepted Accounting Practice. The external auditor is engaged to express an independent opinion on the consolidated annual financial statements.

The consolidated annual financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice as per the directive of the South African Accounting Standards Board’s pending finalisation of the accounting framework for South African State-owned entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

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

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

The directors have reviewed the group’s cash flow forecast for the year to 31 March 2015 and, in the light of this review and the current financial position, they are satisfied that the group has or has access to adequate resources to continue in operational existence for the foreseeable future.

The consolidated annual financial statements set out on pages 70 to 134, which have been prepared on the going concern basis, were approved by the board on 28 May 2014 and were signed on its behalf by:

Mr M Lekota Mr L Masia

Chairman Managing Director


Directors’ report

The directors have pleasure in submitting their report on the consolidated annual financial statements of Limpopo Economic Development Agency and its subsidiaries for the year ended 31 March 2014.

1. nAturE Of BuSinESS

Limpopo Economic Development Agency and its subsidiaries is engaged in financing, development, business and financial management support of small and medium enterprises, public transport, rental of properties, housing finance, mining and exploration, agriculture, export promotion and investment attraction in Limpopo and operates principally in the Limpopo Province of South Africa.

There have been no material changes to the nature of the group’s business from the prior year.

2. rEviEw Of finAnCiAL rESuLtS AnD ACtivitiES

The consolidated annual financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice (in accordance with the directive from the South African Accounting Standards Board’s pending review and finalisation of the accounting framework for South African State owned entities) and the requirements of the Limpopo Development Corporation Act, Companies Act 71 of 2008 and Public Finance Management Act 1 of 1999 (PFMA). The accounting policies have been applied consistently compared to the prior year.

3. ShArE CAPitAL

There have been no changes to the authorised or issued share capital during the year under review.

4. DirECtOrAtE

The directors in office at the date of this report are as follows:

directors designation Changes

Mr M Lekota (Chairman) non-executive Independent Appointed 28 August 2013

Mr D Kourtoumbellides (Deputy Chairman) non-executive Independent Appointed 28 August 2013

Mr SV Chepape non-executive Independent Appointed 28 August 2013

Mr SC nkadimeng non-executive Independent Appointed 28 August 2013

Ms K Maroga non-executive Independent Appointed 28 August 2013

Mr M Maphutha non-executive Independent Appointed 28 August 2013

Ms MA Mphahlele non-executive Independent Appointed 28 August 2013

Mr L Masia (Managing Director) Executive

Mr M Madzivhandila non-executive Independent Resigned 25 July 2013

Ms HB Khan non-executive Independent Resigned 25 July 2013

Ms V Manyama-Matome non-executive Independent Resigned 25 July 2013


Directors in office (continued)directors designation Changes

Mr TC Luvhani non-executive Independent Resigned 25 July 2013

Mr ME Maluleke non-executive Independent Resigned 25 July 2013

Ms MO Moganedi non-executive Independent Resigned 25 July 2013

Ms DM Lerutla non-executive Independent Resigned 25 July 2013

Mr TC Mhlaba non-executive Independent Resigned 25 July 2013

Mr SR Monakedi non-executive Independent Resigned 25 July 2013

Mr DS Simelane non-executive Independent Resigned 25 July 2013

Ms M Mosidi non-executive Independent Resigned 25 July 2013

5. intErEStS in SuBSiDiAriES, ASSOCiAtES AnD jOint ArrAngEMEntS

Details of material interests in subsidiary companies, associates and joint venture are presented in the consolidated consolidated annual financial statements in notes 7, 8 and 9.

There were no significant acquisitions or divestitures during the year ended 31 March 2014.

6. hOLDing Entity

The group’s holding entity is Limpopo Department of Economic Development, Environment and Tourism (LEDET) which holds 100% (2013: 100%) of the group’s equity. Limpopo Department of Economic Development, Environment and Tourism (LEDET) is a Department of the Limpopo Provincial government.

7. EvEntS AftEr thE rEPOrting PEriOD

The directors are not aware of any material events which occurred after the reporting date and up to the date of this report.

8. AuDitOrS

Auditor General of South Africa continued in office as auditors for the agency and its subsidiaries for 2014.

9. SECrEtAry

The group company secretary is Ms MC Mokoma.

Business address Enterprise Development HouseMain RoadLebowakgomo0737


Company Secretary’s Certification

To the shareholders of the Limpopo Economic Development Agency and its subsidiaries,

declaration by the Company Secretary in terms of Section 88(2)(e) of the Companies act, act no. 71 of 2008

I hereby certify that LEDA and its subsidiaries have lodged with the Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.

Ms MC MokomaGroup Company Secretary31 May 2014


Auditor-general’s report

rEPOrt On thE COnSOLiDAtED AnD SEPArAtE finAnCiAL StAtEMEntS

Introduction

1. I have audited the consolidated and separate financial statements of the Limpopo Economic Development Agency and its subsidiaries set out on pages 70 to 134, which comprise the consolidated and separate statement of financial position as at 31 March 2014, the consolidated and separate statement of profit and loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

accounting authority’s responsibility for the consolidated and separate financial statements

2. The board of directors, which constitutes the accounting authority is responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and the Companies Act of South Africa, 2008 (Act No. 71 of 2008) (Companies Act), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

auditor-general’s responsibility

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

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

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


opinion

6. In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of the Limpopo Economic Development Agency and its subsidiaries as at 31 March 2014, and their financial performance and cash flows for the year then ended in accordance with the SA Statements of GAAP and the requirements of the PFMA and the Companies Act.

Emphasis of matters

7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Significant uncertainties

8. With reference to Note 41 to the financial statements, entities in the group are the defendants in several claims. The ultimate outcome of these matters cannot presently be determined and no provision for any liability or contingent asset has been made in the financial statements.

Material impairments

9. As disclosed in Note 10, 12, and 18 to the consolidated financial statements, material impairments to the amounts of R154 276 171, R181 674 505, R68 947 090 were made to loans to (from) group companies for associates, other financial assets and trade and other receivables respectively, as a result of losses incurred by associates and inadequate debtor collection systems.

10. As disclosed in Note 5, 9, and 10 to the financial statements, the agency made material impairments to the amounts of R34 364 608, R14 752 700 and R48 755 198, respectively for property, plant and equipment, investments in associates and loans to (from) group companies pertaining to subsidiaries, as a result of an asset not being used, losses incurred by associates and the agency deferring its right to claim payment of debts due in the normal course of business on an on-going basis.

Irregular expenditure

11. As disclosed in note 49 to the consolidated financial statements, irregular expenditure amounting to R49 302 785 has been incurred by the group, due to the contravention of procurement policies.

additional matters

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

other reports required by the Companies act

13. As part of my audit of the financial statements for the year ended 31 March 2014, I have read the director’s report and the audit committee’s report for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports I have not identified material inconsistencies between the reports and the audited financial statements. I have not audited the reports and accordingly do not express an opinion thereon.


rEPOrt On OthEr LEgAL AnD rEguLAtOry rEquirEMEntS

14. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

15. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the group for the year ended 31 March 2014.

• Programme2:Enterprisedevelopmentandfinanceonpages20to22

• Programme3:Propertymanagementonpage24

• Programme5:Tradeandinvestmentpromotionsonpage30to32

• Programme6:Subsidiariesonpages34to37.

16. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

17. I evaluated the usefulness of reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programme. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

18. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

19. The material findings in respect of the selected programmes are as follows:

Programme 2: Enterprise development and finance

usefulness of reported performance information

Measurability of indicators

20. The FMPPI requires performance indicators must be well defined by having clear data definitions so that data can be collected consistently and is easy to understand and use. A total of 100% of the indicators were not well defined.

This was because management did not adhere to the requirements of the FMPPI, due to a lack of proper systems and processes, as well as technical indicator descriptions.

reliability of reported performance information

21. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planes objectives, indicators and targets. Adequate and reliable corroborating evidence could not be provided for 33% of the targets to assess the reliability of the reported performance information. The auditee’s


records did not permit the application of alternative audit procedures. This was due to a lack of technical indicator descriptions for the accurate measurement, monitoring of the completeness of source documentation of actual achievements and frequent review of the validity and accuracy of reported achievements against source documentation.

Programme 5: trade and investment promotions

usefulness of reported performance information

Measurability of indicators

22. The FMPPI requires the performance indicators must be well defined by having clear data definitions so that data can be collected consistently and is easy to understand and use. A total of 83% of the indicators were not well defined.

This was because management did not adhere to the requirements of the FMPPI, due to a lack of proper systems and processes as well as technical indicator descriptions.

reliability of reported performance information

23. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Overall, significant important targets were not reliable because I was unable to obtain sufficient appropriate audit evidence for significantly important targets. In addition, a significant important target was not valid and accurate when compared to source information provided. This was due to a lack of technical indicator descriptions for the accurate measurement, monitoring of the completeness of source documentation of actual achievements and frequent review of the validity and accuracy of reported achievements against source documentation.

additional matters

24. I draw attention to the following matters:

achievement of planned targets

25. Refer to the annual performance report on pages 18 to 49 for information on the achievement of planned targets for the year. This information should be considered in the context of the material findings on usefulness and reliability of the reported performance information for the selected programmes reported in paragraphs 20 to 23 of this report.

adjustment of material misstatements

26. I identified material misstatements in the annual performance report submitted for auditing on the reported performance information for programmes 2, 3, 5 and 6. As management subsequently corrected only some of the misstatements, I raised material findings on the usefulness and reliability of the reported performance information.


Compliance with legislation

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

Strategic planning and performance management

28. Effective, efficient and transparent systems of risk management and internal controls with respect to performance information and management was not adequately maintained as required by Section 51(1)(a)(i) of the PFMA.

annual financial statements, performance and annual reports

29. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 55(1)(b) of the PFMA and section 29(1)(a) of the Companies Act.

Material misstatements of non-current assets, current assets, revenue, expenditure and disclosure items identified by the auditors in the submitted financial statements were subsequently corrected, resulting in the separate financial statements receiving an unqualified audit opinion.

Internal audit

30. Internal audit did not adequately evaluate the reliability and integrity of five subsidiaries’ financial and operational information, as required by Treasury Regulation (TR) 27.2.10(b).

audit committee

31. The audit committee did not adequately review the adequacy, reliability and accuracy of four subsidiaries’ financial information provided to management and other users, as required by TR 27.1.8(d).

Procurement and contract management

32. Goods, works or service were not procured by the agency and three subsidiaries through a procurement process which is fair, equitable, transparent and competitive as required by Section 51(1)(a)(iii) of the PFMA.

33. Quotations were awarded by two subsidiaries to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order as required by TR 16A9.1(d) and the Preferential Procurement Regulations

Expenditure management

34. The accounting authorities of the agency and two subsidiaries did not take effective steps to prevent irregular expenditure, as required by Section 51(1)(b)(ii) of the PFMA.


asset management

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

revenue management

36. The accounting authorities of the agency and two subsidiaries did not take effective and appropriate steps to collect all money due, as required by Section 51(1)(b)(i) of the PFMA and TR 31.1.2(a) and 31.1.2(e).

Consequence management

37. Effective and appropriate disciplinary steps were not taken against officials of the agency and a subsidiary who incurred and permitted irregular expenditure and fruitless and wasteful expenditure, as required by Section 51(1)(e)(iii) of the PFMA.

Internal control

38. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the annual performance report and the findings on non-compliance with legislation included in this report.

39. Leadership

• Aninadequateperformanceinformationmanagementsystemandprocessesexistwhichdoesnot ensure performance information that is in all instances useful and reliable.

• Theaccountingauthorityandmanagementdonotadequatelyexerciseoversightresponsibilityin finding a solution that would ensure that material impairments and provision for bad debts are reduced to satisfactory levels and increased its contribution to economic growth in the province.

40. Financial and performance management

• Theseparatefinancialstatementscontainedmaterialmisstatementsthatwerecorrected.Thiswas mainly due to inadequate review of the financial statements.

• Theannualperformancereportcontainedmaterialmisstatementsthatwerecorrected.Thiswasdue to a lack of proper systems and processes as well as a lack of technical indicator descriptions.

• An adequate and frequent review of the validity, accuracy and completeness of reportedachievements against source documentation was not performed.

41. Governance

• Through on-going monitoring the accounting authorities and management within the groupand the audit committee has to ensure there is an adequately resourced internal audit unit that assessed the effectiveness of the internal control environment, including financial and performance reporting and compliance with legislation.


other reports

Investigations

42. The managing director who was previously on special leave reported for duty in September 2013. The executive authority of the Department of Economic Development, Environment and Tourism completed an investigation on this matter and has neither found any basis nor substantive reason why the managing director was put on special leave or should continue to be subjected to a disciplinary hearing. As a result, the special leave was withdrawn in September 2013 which concluded the matter.

43. An investigation is being conducted that involves the activities of an executive manager who has been placed on special leave since July 2013. The investigation was still on-going at the reporting date.

Polokwane

19 August 2014


GrouP aGEnCY

notes

2014

r

2013

r

2014

r

2013

r

Assets

Non-Current Assets

Biological assets 3 1 894 073 1 773 390 1 894 073 1 773 390

Investment property 4 184 683 509 189 119 707 176 938 794 186 082 137

Property, plant and equipment 5 358 352 749 428 688 197 45 556 958 80 008 154

Intangible assets 6 47 738 057 43 690 947 257 737 312 540

Investments in subsidiaries 7 - - 173 981 732 171 921 463

Investments in associates 9 58 910 686 172 304 448 14 962 741 28 715 241

Loans to group companies 10 29 693 325 135 694 272 84 599 831 169 466 948

Loan to related party 11 1 500 000 - - -

Other financial assets 12 339 424 892 308 883 888 65 114 648 63 114 566

Long term prepaid expenses 15 7 375 603 134 829 - -

Environmental rehabilitation deposit 16 9 896 659 9 721 090 - -

1 039 469 553 1 290 010 768 563 306 514 701 394 439

Current Assets

Inventories 17 46 213 051 39 497 954 1 415 785 558 099

Loans to group companies 10 2 543 868 - 3 712 583 -

Other financial assets 12 28 799 861 28 259 963 4 817 382 4 789 099

Current tax receivable 198 212 198 212 - -

Trade and other receivables 18 87 470 540 72 933 992 53 409 139 37 212 129

Short-term portion of prepaid expenses 15 9 208 517 3 275 422 - -

Cash and cash equivalents 19 159 176 567 127 115 569 77 590 940 44 013 759

333 610 616 271 281 112 140 945 829 86 573 086

non-current assets held for sale and assets of disposal groups 20 91 621 560 961 91 621 560 961

Total Assets 1 373 171 790 1 561 852 841 704 343 964 788 528 486

Equity and Liabilities

Equity Attributable to Equity Holders of Parent

Share capital 21 409 216 005 409 216 005 409 216 005 409 216 005

Reserves 473 635 963 466 423 991 229 881 143 222 669 171

Accumulated profit/(loss) 165 112 234 365 819 952 (79 489 931) 8 309 627

1 047 964 202 1 241 459 948 559 607 217 640 194 803

non-controlling interest (1 288 276) 3 650 147 - -

1 046 675 926 1 245 110 095 559 607 217 640 194 803

Statement of

financial Positionas at 31 March 2014


GrouP aGEnCY

notes

2014

r

2013

r

2014

r

2013

r

Liabilities

Non-Current Liabilities

Loans from group companies 10 - - 34 256 214 29 567 076

Loans from related party 11 21 329 972 17 356 705 - -

Other financial liabilities 25 65 777 65 777 - -

Finance lease obligation 26 2 774 566 14 178 024 79 858 363 996

Retirement benefit obligation 14 30 951 000 30 994 000 16 413 000 16 493 000

Deferred income 27 20 976 064 20 976 064 - -

Deferred tax 13 4 531 838 6 350 371 - -

Provisions 28 19 647 450 17 937 244 - -

100 276 667 107 858 185 50 749 072 46 424 072

Current Liabilities

Loans from group companies 10 2 543 868 - 466 007 6 449 479

Finance lease obligation 26 12 823 589 28 028 635 421 698 925 346

Trade and other payables 29 169 132 564 139 522 374 51 380 794 53 201 234

Deferred income 27 20 823 792 3 462 809 20 823 792 3 462 809

Provisions 28 20 895 384 31 463 457 20 895 384 31 463 457

Bank overdraft 19 - 4 407 286 - 4 407 286

226 219 197 206 884 561 93 987 675 99 909 611

Liabilities of disposal groups 20 - 2 000 000 - 2 000 000

Total Liabilities 326 495 864 316 742 746 144 736 747 148 333 683

Total Equity and Liabilities 1 373 171 790 1 561 852 841 704 343 964 788 528 486

Statement of

financial Positionas at 31 March 2014 (continued)


GrouP aGEnCY

notes

2014

r

2013

r

2014

r

2013

r

Continuing operations

Revenue 30 727 014 385 761 792 223 112 182 199 87 090 012

Cost of sales 31 (49 534 687) (105 448 882) (8 558 662) (3 617 806)

gross profit 677 479 698 656 343 341 103 623 537 83 472 206

Government grant received 32 306 916 000 171 042 663 306 916 000 171 042 663

Other income 32 40 704 298 35 213 921 22 939 614 7 171 574

Operating expenses (1 117 262 579) (891 507 313) (528 837 347) (282 234 203)

operating (loss)/profit 33 (92 162 583) (28 907 388) (95 358 196) (20 547 760)

Investment revenue 34 11 363 537 5 079 586 20 462 048 16 151 151

Income/(loss) from equity accounted investments (113 042 200) (140 447 683) - -

Finance costs 35 (4 660 673) (3 998 250) (3 940 566) (2 376 223)

(Loss)/profit before taxation (198 501 919) (168 273 735) (78 836 714) (6 772 832)

Taxation 36 1 818 532 (819 579) - -

(Loss)/profit from continuing operations (196 683 387) (169 093 314) (78 836 714) (6 772 832)

Discontinued operations

Loss from discontinued operations (8 962 844) (23 557 282) (8 962 844) (23 557 282)

(Loss)/profit for the year (205 646 231) (192 650 596) (87 799 558) (30 330 114)

Other comprehensive income:

Items that may be reclassified to profit or loss:

Available-for-sale financial assets adjustments 7 211 972 184 688 7 211 972 184 688

Other comprehensive income after tax 7 211 972 184 688 7 211 972 184 688

Total comprehensive loss for the year (198 434 259) (192 465 908) (80 587 586) (30 145 426)

Attributable to:

owners of the parent:

Continuing operations (191 744 874) (169 378 106) (78 836 714) (6 772 832)

Discontinued operations (8 962 844) (23 557 282) (8 962 844) (23 557 282)

Loss attributable to owners of the parent (200 707 718) (192 935 388) (87 799 558) (30 330 114)

non-controlling interest:

non-controlling interest - Continuing operations (4 938 513) 284 792 - -

Total comprehensive (loss)/income attributable to:

Owners of the parent (198 434 259) (192 750 700) (80 587 586) (30 145 426)

non-controlling interest - 284 792 - -

(198 434 259) (192 465 908) (80 587 586) (30 145 426)

Statement of

Profit or Loss and Other Comprehensive incomefor the year ended 31 March 2014


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GrouP aGEnCY

notes

2014

r

2013

r

2014

r

2013

r

Cash flows from operating activities

Cash generated from (used in) operations 38 (19 147 776) (14 669 056) (48 067 195) (44 858 242)

Interest income 9 804 377 4 122 133 13 371 214 12 966 294

Dividends received 1 559 160 957 453 7 090 834 3 184 857

Finance costs (4 660 673) (204 905) (3 940 566) (2 359 664)

Movement in deferred taxation - 198 212 - -

Net cash from operating activities (12 444 912) (9 596 163) (31 545 713) (31 066 755)

Cash flows from investing activities

Purchase of property, plant and equipment 5 (15 681 641) (35 558 556) (5 809 170) (1 756 654)

Sale of property, plant and equipment 5 16 490 803 2 615 954 127 768 179 408

Purchase of investment property 4 (1 552 867) (1 307 822) (1 552 867) (1 307 822)

Purchase of other intangible assets 6 (4 441 511) (3 431 666) (87 025) 500

Sale of other intangible assets 6 135 991 - 135 985 61 063

Business combinations 39 - 114 663 863 - 73 716 049

Movement in investments - 2 260 641 - 2 260 641

Movements in loans to group companies 106 000 947 25 119 716 79 860 200 28 092 341

Movements in financial assets (31 080 902) (35 617 252) (2 028 365) (12 227 886)

Purchase of biological assets 3 (1 821 496) (296 306) (1 821 496) (296 306)

Movement in biological assets 3 1 492 936 96 409 1 492 936 96 409

Finance lease payments (26 608 504) (14 160 035) (787 786) 951 152

Net cash from investing activities 42 933 756 54 384 946 69 530 180 89 768 895

Cash flows from financing activities

Increase in cash and cash equivalents from amalgamation - 114 663 863 - 73 716 049

Movement in loan to related party 5 979 440 - - -

Net cash from financing activities 5 979 440 114 663 863 - 73 716 049

Total cash movement for the year 36 468 284 159 452 646 37 984 467 132 418 189

Cash at the beginning of the year 122 708 283 64 385 520 39 606 473 17 695 777

Total cash at end of the year 19 159 176 567 122 708 283 77 590 940 39 606 473

Statement of

Cash flowsfor the year ended 31 March 2014


Accounting Policiesfor the year ended 31 March 2014

1. PrESEntAtiOn Of COnSOLiDAtED AnnuAL finAnCiAL StAtEMEntS

Limpopo Economic Development Agency (LEDA), is a juristic entity established in terms of the Limpopo Development Corporations Act, Act No. 5 of 1994 and operates as a Provincial Government Business Enterprise, entitled to make profit, as listed in schedule 3D of the Public Finance Management Act No. 1 of 1999 (as amended by Act No. 29 of 1999) as Limpopo Development Corporation.

LEDA’s mandate is to promote and carry out the economic development of the Limpopo Province in the agricultural, commercial, financial, industrial fields, mining, transport, housing finance, export promotion and investment attraction.

The consolidated annual financial statements of the LEDA Group for the year ending 31 March 2014 comprises the Agency, its subsidiaries and the Group’s interests in associates and joint ventures (together referred to as the Group).

Basis of preparation

The consolidated annual financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice , and the Companies Act No. 71 of 2008 and Public Finance Management Act No. 1 of 1999 (PFMA) . The consolidated annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rands.

These accounting policies are consistent with the previous period.

1.1 Consolidation

Basis of consolidation

The consolidated annual financial statements incorporate the financial statements of the Agency and all investees which are controlled by the group.

The group has control of an investee when it has power over the investee; it is exposed to or has rights to variable returns from involvement with the investee; and it has the ability to use its power over the investee to affect the amount of the investor’s returns.

The results of subsidiaries are included in the consolidated annual financial statements from the effective date of acquisition to the effective date of disposal.

Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting policies in line with those of the group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the group’s interest therein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interest.


Transactions which result in changes in ownership levels, where the group has control of the subsidiary both before and after the transaction are regarded as equity transaction and are recognised directly in the statement of changes in equity.

The difference between the fair value of consideration paid or received and the movement in non- controlling interest for such transactions is recognised in equity attributable to the owners of the parent.

Business combinations

A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party, or parties, both before and after the amalgamation and that control is not transitory.

The assets transferred and liabilities assumed are recognised by the transferee at their carrying values on initial recognition. The transferee and transferor account for similar assets and liabilities using different financial reporting frameworks, the carrying amounts of the assets and liabilities transferred to the transferee are adjusted to the accounting framework used by the transferee on initial recognition. The net effect of the adjustments is recognised in accumulated profit or loss when assets and liabilities have been recognised. The net identifiable assets transferred represent a contribution from the ultimate parent and are recognised in equity on consolidation as a separate reserve.

Investment in associates

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

An investment in associate is accounted for using the equity method, except when the investment is classified as held-for-sale in accordance with IFRS 5 Non-current assets held-for-sale and discontinued operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the group’s share of net assets of the associate, less any impairment losses.

Losses in an associate in excess of the group’s interest in that associate are recognised only to the extent that the group has incurred a legal or constructive obligation to make payments on behalf of the associate.

Any goodwill on acquisition of an associate is included in the carrying amount of the investment, however, a gain on acquisition is recognised immediately in profit or loss.

Profits or losses on transactions between the group and an associate are eliminated to the extent of the group’s interest therein.

When the group reduces its level of significant influence or loses significant influence, the group proportionately reclassifies the related items which were previously accumulated in equity through other comprehensive income to profit or loss as a reclassification adjustment. In such cases, if an investment remains, that investment is measured to fair value, with the fair value adjustment being recognised in profit or loss as part of the gain or loss on disposal.


Joint ventures

An interest in a joint venture is accounted for using the equity method, except when the investment is classified as held-for-sale in accordance with IFRS 5 Non-current assets held-for-sale and discontinued operations. Under the equity method, interests in joint ventures are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the agency’s share of net assets of the joint venture, less any impairment losses. Profits or losses on transactions between the agency and a joint venture are eliminated to the extent of the agency’s interest therein.

When the agency loses joint control, the group proportionately reclassifies the related items which were previously accumulated in equity through other comprehensive income to profit or loss as a reclassification adjustment. In such cases, if an investment remains, that investment is measured to fair value, with the fair value adjustment being recognised in profit or loss as part of the gain or loss on disposal.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the consolidated annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the consolidated annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the consolidated annual financial statements. Significant judgements include:

trade receivables, held to maturity investments and loans and receivables

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

The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on an individual basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the instrument.

Impairment testing

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumptions used may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time.


Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in Note 28 - Provisions.

1.3 Biological assets

An entity shall recognise a biological asset or agricultural produce when, and only when:

• the entity controls the asset as a result of past events;

• it is probable that future economic benefits associated with the asset will flow to the entity; and

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

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

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

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

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

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

1.4 Investment property

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

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

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Cost model

Investment property is carried at cost less depreciation and any accumulated impairment losses.

Depreciation is provided to write down the cost, less estimated residual value by equal installments over the useful life of the property, which is as follows:

Item useful life Property - land Indefinite

Property - buildings 50 years

Capitalised renovations and other components 5 to 50 years


1.5 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the agency; and

• the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

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

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. The useful lives of items of property, plant and equipment have been assessed as follows:

Item average useful lifeLand Indefinite

Buildings 50 years

Communication equipment 5 years

IT equipment 3 years

Furniture and fittings 5 to 10 years

Leasehold improvements and temporary buildings 5 to 50 years

Motor vehicles and tractors 5 to 10 years

Office equipment 5 years

Plant and machinery

• For agricultural use 2 to 30 years

• For mining use 20 years

• For operational use 2 to 10 years

Mining asset Tonnages mined

Office equipment 5 years

Ancillary vehicles 200 000 kilometers

Sundry equipment 4 - 5 years

Security equipment (Agency and Group) 4 years

Workshop equipment (Agency and Group) 5 years

Operating equipment (Group) 4 years

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

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

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.


1.6 Site restoration and dismantling cost

The group has an obligation to dismantle, remove and restore items of contaminated land from mining activities. Such obligations are referred to as ‘decommissioning, restoration and similar liabilities.

The cost of an item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

1.7 Intangible assets

An intangible asset is recognised when:

• it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

• the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

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

Exploration and evaluation expenditure asset

The group follows the full cost method of accounting for mineral properties and mineral claims. Accordingly, all costs associated with acquisition, exploration and development of mineral reserves, including directly related costs, are capitalised.

All capitalised costs of mineral properties including the estimated future costs to develop proved reserves are amortised on the unit of production method using estimates of proved reserves.

Investments in unproved properties and major development projects are not amortised until proven reserves associated with the project can be determined or until impairment occurs. If the results of an assessment indicate that the properties are accounted for as adjustments of capitalised costs with no gain or loss recognised, unless such adjustments would significantly alter the relationship between capitalised costs and proved reserves of minerals, in which case the gain or loss is recognised in income.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

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

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

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


Item useful lifeProspecting rights not amortised

Bulk sampling selling Over the prospecting right period

Mining permits Tonnages mined

Computer software 3 to 5 years

Computer licences As per the licence agreement term

Rights to water usage 25 years

Broadband licence not amortised until the licence terms are effective

Bus routes 10 years

1.8 Interests in subsidiaries

agency’s annual financial statements

In the agency’s separate annual financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of:

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

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

1.9 Investments in associates

agency’s annual financial statements

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

1.10 Financial instruments

Classification

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

• Financial assets at fair value through profit or loss - held for trading

• Held-to-maturity investment

• Loans and receivables

• Available-for-sale financial assets

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

Initial recognition and measurement

Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the instruments. The group classifies financial instruments, or their component parts, on initial recognition


as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

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

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

Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss.

Loans and receivables are accounted for per IAS 39.AG53-56 per the settlement date method of accounting and no derivative is created between the settlement and trade dates.

Subsequent measurement

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

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

Dividend income is recognised in profit or loss as part of other income when the group’s right to receive payment is established. Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

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

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

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

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

Fair value determination

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


Impairment of financial assets

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

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

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

Impairment losses are recognised in profit or loss.

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

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

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

Financial instruments designated as at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management.

Financial assets at fair value through profit or loss are measured at fair value, and any changes therein are recognised in profit or loss.

Financial instruments designated as available-for-sale

Available-for-sale investments are non-derivative instruments that are not designated as another category of financial assets. Available-for-sale investments are those intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.

Subsequent to initial recognition, they are measured at fair value and changes therein other than impairment losses are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.


Loans to (from) group companies

These include loans to and from subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs.

Loans to group companies are classified as loans and receivables.

Loans from group companies are classified as financial liabilities measured at amortised cost.

trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired. Debtors are concidered for impairment individually and not on a ss basis. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

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

Trade and other receivables are classified as loans and receivables.

trade and other payables

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

Cash and cash equivalents

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

Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Held to maturity

These financial assets are initially measured at fair value plus direct transaction costs.


At subsequent reporting dates these are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

Financial assets that the group has the positive intention and ability to hold to maturity are classified as held to maturity.

1.11 tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

deferred tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused STC credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period .

tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or

• a business combination.


Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.

1.12 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases – lessor

The group recognises finance lease receivables in the statement of financial position.

Finance income is recognised based on a pattern reflecting a constant periodic rate of return on the group’s net investment in the finance lease.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability.The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

operating leases - lessor

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

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

Income for leases is disclosed under revenue in profit or loss.

operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.


1.13 Inventories

Inventories are measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

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

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

The cost of inventories is assigned using the first-in-first-out (FIFO) and weighted average costs follow:

• Finished goods - Weighted average cost

• Raw materials - Weighted average cost

• Production supplies - Weighted average cost

• Consumables - Weighted average cost (Group) and First-in-first-out (Agency)

The same cost formula is used for all inventories having a similar nature and use to the entity and Group and are considered separate inventory types and industries.

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

1.14 non-current assets held-for-sale and disposal groups

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

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

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

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

1.15 Impairment of assets

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


Irrespective of whether there is any indication of impairment, the group also:

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

• tests goodwill acquired in a business combination for impairment annually.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

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

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

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

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

1.16 Share capital and equity

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

Ordinary shares are classified as equity.

In terms of the Limpopo Development Corporation Act, Act No. 5 of 1999, all income and property and all profits of LEDA or any development corporation shall be exclusively applied to the promotion and attainment of its objectives and no dividends shall be paid to the shareholder.

1.17 Employee benefits

Short-term employee benefits

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

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.


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

defined contribution plans

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

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

defined benefit plans

For defined benefit plans the cost of providing the benefits is determined using the projected unit credit method. Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

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

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

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

Actuarial gains and losses are recognised in the year in which they arise, in profit or loss.

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

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

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

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

1.18 Provisions and contingencies

Provisions are recognised when:

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


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

• a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provisions are not recognised for future operating losses.

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

A constructive obligation to restructure arises only when an entity:

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

- the business or part of a business concerned;

- the principal locations affected;

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

- the expenditures that will be undertaken; and

- when the plan will be implemented; and

• has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.

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

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

• the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 41.

1.19 Government grants

Government grants are recognised when there is reasonable assurance that:

• the group will comply with the conditions attaching to them; and

• the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

1.20 revenue

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

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

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


• the amount of revenue can be measured reliably;

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

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

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

• the amount of revenue can be measured reliably;

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

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

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

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

Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. Stage of completion is determined by services performed to date as a percentage of total services to be performed.

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

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

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

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Service fees and other fees included in the price of the product are recognised as revenue over the period during which the service is performed.

1.21 Cost of sales

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

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

• costs that relate directly to the specific contract;

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

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


1.22 Borrowing costs

All borrowing or finance costs are recognised as an expense in the period in which they are incurred.

1.23 translation of foreign currencies

Functional and presentation currency

Items included in the consolidated annual financial statements of each of the group entities are measured using the currency of the primary economic environment in which the entity operates (functional currency).

The consolidated annual financial statements are presented in Rand which is the group functional and presentation currency.

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

At the end of the reporting period:

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

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

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

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

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

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

1.24 related parties

The Group operates in an economic environment currently dominated by entities directly or indirectly owned by the South African Government. As a result of the Constitutional independence of all three spheres of government in South Africa, only parties within the provincial sphere of government will be considered to be a related party.

Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling the activities of the entities in the Group. We regard all individuals from the level of executive manager up to the Board of Directors as key management per the definition of the standard.

Close family members of key personnel are considered to be those family members who may be expected to influence, or be influenced by, key management individuals in their dealings with the entities in the Group.


Other related party transactions are also disclosed in terms of the requirements of the standard. The objective of the standard and the financial statements is to provide relevant and reliable information and therefore materiality is considered in the disclosure of these transactions.

1.25 Irregular and fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. Irregular expenditure as defined in Section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including:

(a) this Act; or

(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or

(c) any provincial legislation providing for procurement procedures in that provincial government.

National Treasury Practice Note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires the following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial period and which was condoned before the end of the year financial period and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditure register. In such an instance, no further action is also required with the exception of updating the note to the financial statements.

Irregular expenditure that was incurred and identified during the current financial period and for which condonement is being awaited at period-end must be recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial period, the register and the disclosure note to the financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the financial statements.

The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant programme/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register.


2. nEw StAnDArDS AnD intErPrEtAtiOnS

2.1 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the group’s accounting periods beginning on or after 01 April 2014 or later periods:

IFrS 9 Financial Instruments

This new standard is the first phase of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following are main changes from IAS 39:

• Financial assets will be categorised as those subsequently measured at fair value or at amortised cost.

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

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

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

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

• Financial liabilities shall not be reclassified.

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

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

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

The effective date of the standard is for years beginning on or after 01 January 2015.

The group expects to adopt the standard for the first time in the 2016 consolidated annual financial statements.

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

IFrS 1 First time adoption of International Financial reporting Standards

The standard on First Time Adoption of International Reporting Standards (IFRS 1) has not been adopted by the group as per the notice to all State owned enterprises previously on SA GAAP due to review by the South African Accounting Standards Board.

The effective date of the amendments is for future years.

The group expects to adopt the amendments for the first time in the 2015 consolidated annual financial statements. It is unlikely that the amendment will have a material impact on the agency’s consolidated annual financial statements.

Notes to the

Annual financial Statements


3. BiOLOgiCAL ASSEtS

2014 2013

Group

CoST/ VALUATIoN

R

ACCUMULATED DEPRECIATIoN

R

CARRYINg VALUE

R

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

Laying hens 1 894 073 - 1 894 073 1 773 390 - 1 773 390

agency

Laying hens 1 894 073 - 1 894 073 1 773 390 - 1 773 390

reconciliation of biological assets - Group - 2014

oPENINg BALANCE

R

ADDITIoNS

R

DECREASES DUE To

HARVEST/SALES

R

gAINS oR LoSSES ARISINg fRoM CHANgES IN fAIR VALUE

R

ToTAL

R

Laying hens 1 773 390 1 821 496 (1 492 936) (207 877) 1 894 073

reconciliation of biological assets - Group - 2013

oPENINg BALANCE

R

ADDITIoNS

R

ADDITIoNS THRoUgH BUSINESS

CoMBINATIoNS

R

DISPoSALS

R


R

ToTAL

R

Laying hens - 296 306 1 761 187 (96 409) (187 694) 1 773 390

reconciliation of biological assets - agency - 2014

oPENINg BALANCE

R

ADDITIoNS

R

DECREASES DUE To

HARVEST/SALES

R


R

ToTAL

R

Laying hens 1 773 390 1 821 496 (1 492 936) (207 877) 1 894 07


3. BiOLOgiCAL ASSEtS (COntinuED)

reconciliation of biological assets - agency - 2013

oPENINg BALANCE

R

ADDITIoNS

R


CoMBINATIoNS

R

DISPoSALS

R

gAINS oR LoSSES ARISINg fRoM

CHANgES IN fAIR VALUE

R

ToTAL

R

Laying hens - 296 306 1 761 187 (96 409) (187 694) 1 773 390

Methods and assumptions used in determining fair value

The size of the plantation is 100 ha. and used for firewood in the factory. All external sales are incidental. 12 ha are utilised on an annual basis at an average of 2 000.00 m3 and R45 per cubic meter.

4. invEStMEnt PrOPErty

2014 2013

Group

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

Investment property 294 164 457 (109 480 948) 184 683 509 296 475 834 (107 356 127) 189 119 707

agency

279 501 823 (102 563 029) 176 938 794 286 802 200 (100 720 063) 186 082 137

reconciliation of investment property - Group - 2014

oPENINg BALANCE

R

ADDITIoNS

R

DEPRECIATIoN

R

IMPAIRMENTS

R

ToTAL

R

Investment property 189 119 707 1 552 867 (3 973 809) (2 015 256) 184 683 509

reconciliation of investment property - Group - 2013

oPENINg BALANCE

(RESTATED)

R

ADDITIoNS

R


CoMBINATIoNS

R

DEPRECIATIoN

R

IMPAIRMENTS

R

ToTAL

R

Investment property 191 209 962 1 307 822 7 350 511 (3 343 930) (7 404 658) 189 119 707


4. invEStMEnt PrOPErty (COntinuED)

reconciliation of investment property - agency - 2014

oPENINg BALANCE

R

ADDITIoNS

R

IMPAIRMENT

R

DEPRECIATIoN

R

ToTAL

R

Investment property 181 093 137 1 552 867 (2 015 256) (3 691 954) 176 938 794

reconciliation of investment property - agency - 2013

oPENINg BALANCE

(RESTATED)

R

ADDITIoNS

R


CoMBINATIoNS

R

DEPRECIATIoN

R

IMPAIRMENTS

R

ToTAL

R

Investment property 183 177 769 1 307 822 7 350 511 (3 338 307) (7 404 658) 181 093 137

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Fair value of investment properties 416 511 301 542 557 519 408 320 622 558 897 774

The fair value of the property reflects the present value of the total future benefits which an owner may expect to derive from the property.

These benefits are expressed in monetary terms and are based upon the estimated rentals such a property would generate in the market between a willing landlord and a tenant.

The fair value of investment property is calculated based on the Group’s actual rate of return which should be higher or equal to the expected rate of return of 12% which is a rate agreed with the shareholder.

the following amounts have been recognised in the profit or loss relating to investment property

Rental income 91 973 631 80 255 121 91 486 194 79 438 905

Direct operating expenses arising from investment properties (51 191 486) (52 280 869) (51 191 486) (52 280 869)

Actual rate of return 22% 15% 22% 15%

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the Agency.


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360

(183

615

163

)42

8 68

8 19

7

2014

2013

ag

ency

CoST

/ VA

LUAT

IoN

R

ACCU

MUL

ATED

DE

PREC

IATI

oN

R

CARR

YINg

VAL

UE

R

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/ VA

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IoN

R

ACCU

MUL

ATED

DE

PREC

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oN

R

CARR

YINg

VAL

UE

R

Land

2 93

2 00

0-

2 93

2 00

02

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000

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932

000

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ings

and

leas

ehol

d im

prov

emen

ts53

364

097

(22

830

315)

30 5

33 7

8247

072

931

(13

405

464)

33 6

67 4

67

Fina

nce

leas

ed o

ffice

equ

ipm

ent

356

945

(277

392

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553

2 89

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8(2

269

204

)62

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4

Plan

t and

mac

hine

ry38

365

947

(34

394

149)

3 97

1 79

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074

(4 9

06 5

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61 4

90

Furn

iture

and

fixt

ures

6 36

2 92

9(4

284

905

)2

078

024

6 36

2 92

9(4

081

294

)2

281

635

Mot

or v

ehic

les

8 27

1 86

0(6

960

182

)1

311

678

8 27

1 86

0(6

382

123

)1

889

737

Offic

e eq

uipm

ent

4 85

7 98

2(3

258

512

)1

599

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quip

men

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men

t43

9 85

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77 0

31)

162

828

439

859

(213

070

)22

6 78

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ksho

p eq

uipm

ent

2 62

9 17

1(1

455

389

)1

173

782

2 62

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1(1

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5)45

556

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(43

367

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rt

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LAn

t A

nD

Eq

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(CO

nt

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rec

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of

pro

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ty, p

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eq

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Gro

up -

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4

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(36

738)

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306

305

) -

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Gro

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R

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ToTA

L

R

Land

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240

365

Build

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prov

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ts15

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558

985

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43(4

00 9

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Fina

nce

leas

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533

340

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Plan

t and

mac

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584

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Furn

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2 59

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58 6

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425

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57 3

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Mot

or v

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78 0

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275

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)(4

48 4

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quip

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162

828

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6 70

0-

-(2

62 9

18)

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173

782

84 9

97 1

545

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(127

768

)(1

0 75

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0)(3

4 36

4 60

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556

958

rec

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of

pro

per

ty, p

lant

and

eq

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men

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ency

- 2

013

oPEN

INg

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LANC

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R

ADDI

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R

Land

1 98

0 00

0-

952

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--

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932

000

Build

ings

and

leas

ehol

d im

prov

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ts11

948

892

555

615

26 6

13 2

84-

-(4

61 3

24)

38 6

56 4

67

Fina

nce

leas

ed o

ffice

equ

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ent

533

340

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4 25

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(138

)(1

61 7

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625

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Plan

t and

mac

hine

ry72

301

306

139

34 0

20 0

43(1

48 5

00)

-(1

288

493

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961

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Furn

iture

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fixt

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2 13

3 62

330

724

1 18

0 26

9(5

867

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0 79

5(1

267

909

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281

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Mot

or v

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443

189

283

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764

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6 14

826

2 09

281

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189

)(9

538

)(5

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53)

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034

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1 48

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6 78

9

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p eq

uipm

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6 74

6-

-(9

0 04

6)1

436

700

20 2

55 8

331

756

654

68 1

83 0

02(1

79 4

08)

-(5

018

927

)84

997

154


5. P

rO

PE

rt

y, P

LAn

t A

nD

Eq

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ME

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(CO

nt

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ty, p

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ency

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014

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BALA

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R

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R

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R

ToTA

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R

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2 93

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656

467

4 82

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Fina

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ent

625

734

-(1

13 4

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(432

759

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53

Plan

t and

mac

hine

ry32

961

490

100

875

-(2

337

061

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6 75

3 50

6)3

971

798

Furn

iture

and

fixt

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2 28

1 63

521

2 67

8-

(416

289

)-

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4

Mot

or v

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les

1 88

9 73

7-

-(5

78 0

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311

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Offic

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275

360

(487

)(4

48 4

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599

470

IT e

quip

men

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595

501

(13

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(881

119

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4 04

3

Sund

ry e

quip

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t22

6 78

9-

-(6

3 96

1)-

162

828

Wor

ksho

p eq

uipm

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6 70

0-

-(2

62 9

18)

-1

173

782

84 9

97 1

545

809

170

(127

768

)(1

0 75

6 99

0)(3

4 36

4 60

8)45

556

958

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of

pro

per

ty, p

lant

and

eq

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men

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ag

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- 2

013

oPEN

INg

BA

LANC

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R

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R

ADDI

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TRAN

SfER

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R

DEPR

ECIA

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R

ToTA

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R

Land

1 98

0 00

0-

952

000

--

-2

932

000

Build

ings

and

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prov

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948

892

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615

26 6

13 2

84-

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61 3

24)

38 6

56 4

67

Fina

nce

leas

ed o

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533

340

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4 25

5-

(138

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61 7

23)

625

734

Plan

t and

mac

hine

ry72

301

306

139

34 0

20 0

43(1

48 5

00)

-(1

288

493

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961

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Furn

iture

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fixt

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2 13

3 62

330

724

1 18

0 26

9(5

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0 79

5(1

267

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281

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Mot

or v

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443

189

283

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1 49

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e eq

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826

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9

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756

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5. PrOPErty, PLAnt AnD EquiPMEnt (COntinuED)

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Pledged as security (subject to finance lease)

Carrying value of assets pledged as security:

Buses 113 043 723 79 669 841 - -

Finance leased office equipment 79 553 419 948 79 553 419 948

Great North Transport (SOC) Limited leases buses under a number of finance lease agreements. The leased bus fleet secures the lease obligations as per Note 26 over which these assets are secured.

LEDA leases photocopying machines in terms of an operating lease. Substance over form of the contract requires in terms of the accounting policy to treat these as finance leases and the assets are capitalised. Refer to lease liability note 26 over which these assets are secured.

Great north transport (SoC) Limited

Land and buildings with a cost price of R10 579 is registered in the name of the Parent company, Limpopo Economic Development Agency. Limpopo Economic Development Agency has 100% shareholding in Great North Transport. Great North Transport is currently transferring these stands into its own name.

Land and buildings with a cost price of R1 007 879 are registered in the name of municipalities. Great North Transport is currently transferring these stands into its own name.

details of property, plant and equipment held as discontinued operations

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the Agency.

6. intAngiBLE ASSEtS

2014 2013

Group

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

Broadband license 100 000 - 100 000 100 000 - 100 000

Computer software 1 505 898 (1 268 692) 237 206 1 973 295 (1 571 130) 402 165

Mining equipment - Lebalelo water project 3 560 406 (996 914) 2 563 492 3 560 406 (854 497) 2 705 909

Exploration and evaluation asset 39 261 126 - 39 261 126 34 906 640 - 34 906 640

Environmental rehabilitation asset 3 489 444 - 3 489 444 3 489 444 - 3 489 444

Bus routes 2 086 789 - 2 086 789 2 086 789 - 2 086 789

Total 50 003 663 (2 265 606) 47 738 057 46 116 574 (2 425 627) 43 690 947


6. intAngiBLE ASSEtS (COntinuED)

2014 2013

agency

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

CoST/ VALUATIoN

R


R

CARRYINg VALUE

R

Broadband license 100 000 - 100 000 100 000 - 100 000

Computer software 822 579 (664 842) 157 737 1 276 913 (1 064 373) 212 540

Total 922 579 (664 842) 257 737 1 376 913 (1 064 373) 312 540

reconciliation of intangible assets - Group - 2014

oPENINg BALANCE

R

ADDITIoNS

R

DISPoSALS

R

AMoRTISATIoN

R

ToTAL

R

Broadband license 100 000 - - - 100 000

Computer software 402 165 87 025 (135 991) (115 993) 237 206

Mining equipment - Lebalelo water project 2 705 909 - - (142 417) 2 563 492

Exploration and evaluation asset 34 906 640 4 354 486 - - 39 261 126

Environmental rehabilitation asset 3 489 444 - - - 3 489 444

Bus routes 2 086 789 - - - 2 086 789

43 690 947 4 441 511 (135 991) (258 410) 47 738 057

reconciliation of intangible assets - Group - 2013

oPENINg BALANCE

R

ADDITIoNS

R


CoMBINATIoNS

R

AMoRTISATIoN

R

IMPAIRMENT LoSS

R

ToTAL

R

Prospecting rights 61 063 - - - (61 063) -

Broadband license 100 000 - - - - 100 000

Computer software 343 074 5 760 142 818 (48 771) (40 716) 402 165

Mining equipment - Leb-alelo water project 2 848 325 - (142 416) - 2 705 909

Exploration and evalua-tion asset 31 480 734 3 425 906 - - - 34 906 640

Environmental rehabilita-tion asset 3 489 444 - - - - 3 489 444

Bus routes 2 086 789 - - - - 2 086 789

40 409 429 3 431 666 142 818 (191 187) (101 779) 43 690 947


6. intAngiBLE ASSEtS (COntinuED)

reconciliation of intangible assets - agency - 2014

oPENINg BALANCE

R

ADDITIoNS

R

DISPoSALS

R

AMoRTISATIoN

R

ToTAL

R

Broadband license 100 000 - - - 100 000

Computer software 212 540 87 025 (135 985) (5 843) 157 737

312 540 87 025 (135 985) (5 843) 257 737

oPENINg BALANCE

R

ADDITIoNS

R


CoMBINATIoNS

R

AMoRTISATIoN

R

IMPAIRMENT LoSS

R

ToTAL

R

Prospecting rights 61 063 - (61 063) - - -

Broadband license 100 000 - - - - 100 000

Computer software 150 306 140 202 - (37 252) (40 716) 212 540

311 369 140 202 (61 063) (37 252) (40 716) 312 540

7. intErEStS in SuBSiDiAriES inCLuDing COnSOLiDAtED StruCturED EntitiES

The following table lists the entities which are controlled directly by the Agency:

NAME of SUBSIDIARY

LISTED / UNLISTED

% VoTINg PoWER

2014

% VoTINg PoWER

2013

% HoLDINg

2014

% HoLDINg

2013

CARRYINg AMoUNT 2014

R

CARRYINg AMoUNT 2013

R

Risima Housing Finance Corporation (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 156 542 512 156 542 512

Mapulaneng Investment Enterprises (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 8 320 000 8 320 000

Venteco (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 7 139 802 7 139 802

Mununzwu Estate (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 1 477 318 1 477 318

Great north Transport (SOC) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 500 000 500 000

VDC Investments (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 2 000 2 000

Capitol Hill Investments (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 1 820 1 820

Corridor Mining Resources (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 100 100

Kulungisa (Proprietary) Limited Unlisted 100,00 % 100,00 % 100,00 % 100,00 % 4 4

Impairment of investment in subsidiaries (1 824) (2 062 093)

173 981 732 171 921 463

reporting period

The end of the reporting period of all subsidiaries and sub-subsidiaries is 31 March 2014.

Refer to note 50 for net investment in sub-subsidiaries directly controlled by Corridor Mining Resources (Proprietary) Limited, a subsidiary of Limpopo Economic Development Agency.


8. jOint vEnturE

The following table lists all of the joint ventures in the group:

Group

name of joint venture Held by

% oWNERSHIP INTEREST

2014


2013

CARRYINg AMoUNT

2014

CARRYINg AMoUNT

2013

Rock Island Trading 17 (Proprietary) Limited

Corridor Mining Resources (Proprietary) Limited 45,00 % 45,00 % - -

unrecognised losses

The group has discontinued recognising its share of the losses of Rock Island Trading 17 (Proprietary) Limited, as the accumuated losses of the joint venture exceeds the initial investment of R300 000 (2013: R300 000) and the group has no obligation for any additional losses of the joint venture.

9. invEStMEntS in ASSOCiAtES

The following table lists all of the associates in the group:

Group



2014


2013

CARRYINg AMoUNT

2014

CARRYINg AMoUNT

2013

AOn Limpopo (Proprietary) Limited Agency 48,00 % 48,00 % 2 059 748 4 133 867

ASA Metals (Proprietary) Limited Agency 40,00 % 40,00 % - 117 530 633

AttaClay (Proprietary) Limited Agency 30,00 % 30,00 % - -

Bopedi Shopping Centre (Proprietary) Limited Agency 47,00 % 47,00 % 24 500 695 24 500 695

Lebowa Advertising (Proprietary) Limited Agency 50,00 % 50,00 % 390 142 400 142

Makapan Mall (Proprietary) Limited t/a Mokopane Mall Agency 46,31 % 46,31 % 11 507 023 9 053 345

Mahube Mining (Proprietary) Limited Agency 21,00 % 21,00 % - -

The new Chuene Resort (Proprietary) Limited Agency 30,00 % 30,00 % - -

OK Bazaars Venda Limited Agency 33,33 % 33,33 % 20 453 078 16 385 766

Rent-a-sign Lebowa (Proprietary) Limited Agency 50,00 % 50,00 % - -

Vanadium & Magnetite Exploration & Development Co. (SA) (Proprietary) Limited

Corridor Mining Resources (Proprietary) Limited 33,33 % 33,33 % - -

58 910 686 172 304 448


9. invEStMEntS in ASSOCiAtES (COntinuED)

agency



2014


2013

CARRYINg AMoUNT

2014

CARRYINg AMoUNT

2013

AOn Limpopo (Proprietary) Limited Unlisted 48,00 % 48,00 % 9 914 9 914

ASA Metals (Proprietary) Limited Unlisted 40,00 % 40,00 % 13 750 000 13 750 000

AttaClay (Proprietary) Limited Unlisted 30,00 % 30,00 % 30 30

Bopedi Shopping Centre (Proprietary) Limited Unlisted 47,00 % 47,00 % 13 999 997 13 999 997

Lebowa Advertising (Proprietary) Limited Unlisted 50,00 % 50,00 % 2 500 2 500

Mahube Mining (Proprietary) Limited Unlisted 21,00 % 21,00 % 200 200

Makapan Mall (Proprietary) Limited t/a Mokopane Mall Unlisted 46,31 % 46,31 % 500 500

The new Chuene Resort (Proprietary) Limited Unlisted 30,00 % 30,00 % 1 000 000 1 000 000

OK Bazaars Venda Limited Unlisted 33,33 % 33,33 % 951 800 951 800

Rent-a-sign Lebowa (Proprietary) Limited Unlisted 50,00 % 50,00 % 500 500

Impairment of investments in associates (14 752 700) (1 000 200)

14 962 741 28 715 241

Summarised financial information of material associates

2014

Summarised statement of comprehensive incomeREVENUE

R

PRofIT/(LoSS) fRoM CoNTINUINg

oPERATIoNS

R

ToTAL CoMPREHENSIVE

INCoME

R

ASA Metals (Proprietary) Limited 1 857 360 000 (445 528 000) (445 528 000)

AOn Limpopo (Proprietary) Limited 11 490 213 2 127 839 2 127 839

Makapan Mall (Proprietary) Limited 11 191 449 4 895 706 4 895 706

OK Bazaars Venda Limited 151 988 000 9 773 000 9 773 000

Mahube Mining (Proprietary) Limited - (1 901 694) (1 901 694)

Bopedi Shopping Centre (Proprietary) Limited 13 866 806 13 005 474 13 005 474

Rent-a-sign Lebowa (Proprietary) Limited 306 173 30 142 30 142

Lebowa Advertising (Proprietary) Limited - (20 000) (20 000)

2 046 202 641 (417 617 533) (417 617 533)

NoN-CURRENT ASSETS

R

CURRENT ASSETS

R

NoN-CURRENT LIABILITIES

R

CURRENT LIABILITIES

R

ToTAL NET LIABILITIES

R

ASA Metals (Proprietary) Limited 2 738 771 000 906 212 000 2 789 095 000 1 003 960 000 (148 072 000)

AOn Limpopo (Proprietary) Limited 240 861 17 807 785 - 12 089 020 5 959 626

Makapan Mall (Proprietary) Limited 93 225 342 1 166 100 33 361 702 8 912 278 52 117 462

OK Bazaars Venda Limited 6 164 179 75 902 606 1 246 912 19 460 639 61 359 234

Mahube Mining (Proprietary) Limited 195 008 699 950 223 530 542 - (28 520 893)

Bopedi Shopping Centre (Proprietary) Limited 87 257 214 1 023 794 39 428 813 4 312 471 44 539 724

Rent-a-sign Lebowa (Proprietary) Limited - 2 779 561 - 2 939 914 (160 353)

Lebowa Advertising (Proprietary) Limited - 1 846 073 - 1 065 789 780 284

3 120 667 295 1 006 738 869 3 086 662 969 1 052 740 111 (11 996 916)



Reconciliation of net assets to equity accounted investments in associates

ToTAL NET ASSETS

R

INTEREST IN ASSoCIATE AT %

oWNERSHIP

R

ACCUMULATED UNRECogNISED

LoSSES

R

INVESTMENT IN ASSoCIATE

R

ASA Metals (Proprietary) Limited (148 072 000) (178 171 200) 178 171 200 -

AOn Limpopo (Proprietary) Limited 5 959 626 2 059 748 - 2 059 748

Bopedi Shopping Centre (Proprietary) Limited 44 539 724 24 500 695 24 500 695

OK Bazaars Venda Limited 61 359 234 20 453 078 - 20 453 078

Mahube Mining (Proprietary) Limited (28 520 893) - - -

Makapan Mall (Proprietary) Limited 52 117 462 11 506 523 - 11 506 523

Rent-a-sign Lebowa (Proprietary) Limited (160 353) (80 177) 80 177 -

Lebowa Advertising (Proprietary) Limited 780 284 390 142 - 390 142

(11 996 916) (119 341 191) 178 251 377 58 910 186

2013

Summarised statement of comprehensive incomeREVENUE

R

PRofIT (LoSS) fRoM CoNTINUINg

oPERATIoNS

R

ToTAL CoMPREHENSIVE

INCoME

R

ASA Metals (Proprietary) Limited 1 970 802 000 (380 019 000) 1 590 783 000

AttaClay (Proprietary) Limited 4 166 100 - 4 166 100

Bopedi Shopping Centre (Proprietary) Limited 5 184 717 943 802 6 128 519

Mokopane Mall (Proprietary) Limited t/a Mokopane Mall 5 188 932 1 110 181 6 299 113

Lebowa Advertising (Proprietary) Limited 1 800 5 400 7 200

AOn Limpopo (Proprietary) Limited 5 230 750 2 040 136 7 270 886

OK Bazaars Venda Limited 47 290 329 8 238 851 55 529 180

Mahube Mining (Proprietary) Limited - (1 185 376) (1 185 376)

2 037 864 628 (368 866 006) 1 668 998 622

Summarised statement of financial position

NoN-CURRENT ASSETS

R

CURRENT ASSETS

R

NoN-CURRENT LIABILITIES

R

CURRENT LIABILITIES

R

ToTAL NET LIABILITIES

R

ASA Metals (Proprietary) Limited 2 713 238 000 776 765 000 1 720 255 000 1 472 392 000 297 356 000

AttaClay (Proprietary) Limited 4 346 400 - 1 351 500 - 2 994 900

Bopedi Shopping Centre (Proprietary)

Limited 30 709 952 - 18 096 251 - 12 613 701

Makapan Mall (Proprietary) Limited t/a

Mokopane Mall 42 545 318 - 21 430 936 - 21 114 382

Lebowa Advertising (Proprietary) Limited 464 018 - 263 947 - 200 071

Rent-a-sign Lebowa (Proprietary) Limited 1 290 903 - 1 382 340 - (91 437)

AOn Limpopo (Proprietary) Limited 65 892 11 293 499 - 2 527 604 8 831 787

OK Bazaars Venda Limited 21 313 879 - 6 692 824 - 14 621 055

Mahube Mining (Proprietary) Limited 34 964 969 - 35 431 181 - (466 212)

2 848 939 331 788 058 499 1 804 903 979 1 474 919 604 357 174 247



The end of the reporting year of Limpopo Economic Development Agency and its subsidiaries is 31 March 2014. The associates with year-ends three months and less than the group’s reporting period were consolidated. We scrutinised the period from the most recent year end to 31 March 2014 for significant transactions and adjusted the audited financial statements where necessary.

Associates with year-ends greater than three months compared to the Group’s financial year end, management accounts were applied up to and including 31 March 2014. The adjustments to the year ending 31 March 2014 were not significant to the group.

Associates with different year-ends consolidated (with consideration to significant transactions) are:

ASA Metals (Proprietary) Limited 31 December 2013

Bopedi Shopping Centre (Proprietary) Limited 28 February 2014

Makapan Mall (Proprietary) Limited 28 February 2014

OK Bazaars Venda Limited 30 June 2013 (All transactions included up to 31 March 2014)

AttaClay (Proprietary) Limited 30 June 2013 (All transactions included up to 31 March 2014)

AON Limpopo (Proprietary) Limited 31 December 2013

restrictions relating to associates

ASA Metals (Proprietary) Limited is unable to declare any dividends until it has repaid long-term loans to its holding companies.

unrecognised share of losses of associates

The group has discontinued recognising its share of the losses of associates making accumulated losses, as the investment is held at R nil and the group has no obligation for any additional losses of the associates.

These associates are:

• ASA Metals (Proprietary) Limited;• The New Chuene Resort (Proprietary) Limited;• Vanadium & Magnetite Exploration & Development Co. (SA) (Proprietary) Limited; • Rent-a-sign Lebowa (Proprietary) Limited;• Mahube Mining (Proprietary) Limited; and• AttaClay (Proprietary) Limited.

GrouP aGEnCY

10. LOAnS tO (frOM) grOuP COMPAniES2014

r

2013

r

2014

r

2013

r

SuBSIdIarIES

Corridor Mining Resources (Proprietary) Limited - - 72 306 376 50 299 426

Capitol Hill Investments (Proprietary) Limited - - 39 564 573 36 201 749

Kulungisa (Proprietary) Limited - - 10 218 863 10 218 863

Great north Transport (SOC) Limited - - 3 712 583 -

Risima Housing Finance Corporation (Proprietary) Limited - - (466 007) (6 449 479)

VDC Investments (Proprietary) Limited - - (21 801 389) (18 833 443)

Mapulaneng Investments (Proprietary) Limited - - (12 454 825) (10 733 633)

Venteco (Proprietary) Limited - - - 98 788

Mununzwu Estate (Proprietary) Limited - - 301 330 34 012

Impairment of loans to subsidiaries - - (48 755 198) (45 448 767)

- - 42 626 306 15 387 516


10. LOAnS tO (frOM) grOuP COMPAniES (COntinuED)

Limpopo Economic Development Agency (LEDA) has deferred its right to claim payment of debts owing to it by the subsidiaries until their assets, fairly valued, exceeds their liabilities. Loans to subsidiaries where their liabilities are exceeding their assets, have been subordinated in favour of the other creditors. The Agency also issued letters of financial support to these subsidiaries for them to meet their liabilities as they become due in normal course of business on a ongoing basis.

These loans are unsecured and have no fixed repayment terms and are by intent of a long-term nature except for Great North Transport (SOC) Limited and Risima Housing Finance Corporation (Proprietary) Limited which are of a short-term nature.

The loans bear no interest except for the following loans:

Capitol Hill Investments (Proprietary) Limited

The loan bears interest at prime plus 0.5% per annum. The loan is unsecured and has no fixed terms of repayment.

vdC Investments (Proprietary) Limited

The loan bears interest at prime plus 2.5% per annum. The loan is unsecured and has no fixed terms of repayment.

GrouP aGEnCY

JoInt vEnturE

2014

r

2013

r

2014

r

2013

r

Rock Island Trading 17 (Proprietary) Limited 12 676 784 11 134 626 - -

The loan is unsecured, has no fixed terms of repayment and is by intent of a long-term nature and bears interest at prime plus 1%.

GrouP aGEnCY

aSSoCIatES

2014

r

2013

r

2014

r

2013

r

ASA Metals (Proprietary) Limited 111 911 596 107 252 075 111 911 596 107 252 075

Mahube Mining (Proprietary) Limited 40 969 299 37 610 588 40 969 299 37 610 588

Makapan Mall (Proprietary) Limited t/a Mokopane Mall 8 331 946 7 902 904 8 331 946 7 902 904

Vanadium & Magnetite Exploration & Development Co. (SA) (Proprietary) Limited 6 052 654 5 561 634 - -

Bopedi Shopping Centre (Proprietary) Limited 1 195 833 1 516 667 1 195 833 1 516 667

Rent-a-sign Lebowa (Proprietary) Limited 1 436 377 1 391 230 1 436 377 1 391 230

Lebowa Advertising (Proprietary) Limited 1 055 789 1 055 789 1 055 789 1 055 789

The new Chuene Resort (Proprietary) Limited 339 218 339 218 339 218 339 218

Impairment of loans to associates (154 276 171) (39 005 594) (154 276 171) (39 005 594)

17 016 541 123 624 511 10 963 887 118 062 877

Except for the loans below the above loans bear no interest. No securities are in place for the loans and no fixed terms of repayment have been negotiated.

Interest bearing loans to associates are:

• ASA Metals (Proprietary) Limited which carries interest at prime less 0.5%;

• Makapan Mall (Proprietary) Limited t/a Mokopane Mall which carries interest at the prime lending rate;

• Mahube Mining (Proprietary) Limited which carries interest at prime less 0.5% and

• Vanadium & Magnetite Exploration & Development Co. (SA) (Proprietary) Limited which carries interest at JIBAR plus 1%.


10. LOAnS tO (frOM) grOuP COMPAniES (COntinuED)

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

non-current assets 29 693 325 135 694 272 84 599 831 169 466 948

Current assets - - 3 712 583 -

non-current liabilities - - (34 256 214) (29 567 076)

Current liabilities - - (466 007) (6 449 479)

29 693 325 135 694 272 53 590 193 133 450 393

fair value of loans to and from group companies

Loans to group companies 29 693 325 135 694 272 88 312 414 169 466 948

Loans from group companies - - (34 722 221) (36 016 555)

Loans to group companies impaired

As of 31 March 2014, loans to group companies of R154 276 171 (2013: R39 005 594) were impaired and provided for. The ageing of these loans is as follows:

Over 6 months 154 276 171 39 005 594 203 031 369 84 454 361

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. The group does not hold any collateral as security.

11. LOAnS frOM rELAtED PArty

Bolepu Holdings (Proprietary) Limited (21 329 972) (17 356 705) - -

BEE Partners - Autumn Star Trading 65 (Proprietary) Limited 1 500 000 - - -

(19 829 972) (25 809 412) - -

Bolepu Holdings (Proprietary) Limited is a minority shareholder of Sefateng Chrome Mine (Proprietary) Limited, a subsidiary of Corridor Mining Resources (Proprietary) Limited and a sub-subsidiary of the Agency.

The loan bears no interest and has no fixed repayment terms and is by intent of a long term nature.

non-current assets 1 500 000 - - -

non-current liabilities (21 329 972) (17 356 705) - -

(19 829 972) (17 356 705) - -

Fair value of loans from related party

Loans from related party (19 829 972) (17 356 705) - -



12. OthEr finAnCiAL ASSEtS

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Available-for-sale

Listed shares 38 169 531 31 337 192 38 169 531 31 337 192

Unlisted shares 2 176 436 2 267 130 2 111 960 2 204 533

40 345 967 33 604 322 40 281 491 33 541 725

Held to maturity

VBS Mutual Bank Investment 72 027 65 290 72 027 65 290

Liberty Endowment Policy 410 471 344 789 410 471 344 789

Term deposits 4 091 187 4 099 752 4 091 187 4 099 752

4 573 685 4 509 831 4 573 685 4 509 831

Loans and receivables

Business loans 331 886 634 309 110 160 46 222 735 51 346 871

Housing loans 28 735 385 28 197 366 4 817 382 4 789 099

Other loans receivable 245 188 110 188 245 188 110 188

360 867 207 337 417 714 51 285 305 56 246 158

Loans and receivables (impairments) (37 562 107) (38 388 017) (26 208 452) (26 394 050)

323 305 100 299 029 697 25 076 853 29 852 108

Total other financial assets 368 224 752 337 143 850 69 932 029 67 903 664

Non-current assets

Available-for-sale 40 281 491 33 541 725 40 281 491 33 541 725

Held to maturity 4 573 685 4 509 831 4 573 685 4 509 831

Loans and receivables 294 569 715 270 832 331 20 259 471 25 063 009

339 424 891 308 883 887 65 114 647 63 114 565

Current assets

Available-for-sale 64 476 62 597 - -


28 799 861 28 259 963 4 817 382 4 789 099

368 224 752 337 143 850 69 932 029 67 903 664

Fair value information

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

Available-for-sale financial assets are recognised at fair value, unless they are unlisted equity instruments and the fair value cannot be determined using other means, in which case they are measured at cost. Fair value information is not provided for these financial assets.

The group has not reclassified any financial assets from cost or amortised cost to fair value, or from fair value to cost or amortised cost during the current or prior year.

There were no gains or losses realised on the disposal of held to maturity financial assets in 2014 and 2013, as all the financial assets were disposed of at their redemption date.


12. OthEr finAnCiAL ASSEtS (COntinuED)

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Fair values of loans and receivables


Loans and receivables past due but not impaired

The ageing of amounts past due but not impaired is as follows:

not past due 307 498 157 279 847 902 12 461 593 16 273 460

Past due (0 to 90 days) 16 231 821 18 451 510 13 040 138 12 848 364

reconciliation of provision for impairment of loans and receivables

other financial assets

Opening balance (180 374 997) (158 102 984) (168 381 030) (148 234 070)

Provision for impairment (2 298 107) (26 074 488) (2 298 107) (26 565 751)

Amounts written off as uncollectable - 8 554 811 - 6 418 791

Unused amounts reversed 998 599 (4 752 336) 358 287 -

(181 674 505) (180 374 997) (170 320 850) (168 381 030)


13. DEfErrED tAX

deferred tax liability

Accelerated capital allowances for property, plant and equipment (4 531 838) (6 350 371) - -

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:

Deferred tax liability (4 531 838) (6 350 371) - -

reconciliation of deferred tax asset/(liability)

At beginning of year (6 350 371) (5 530 791) - -

Temporary difference on movement of mining asset 1 818 533 (819 580) - -

(4 531 838) (6 350 371) - -


12. OthEr finAnCiAL ASSEtS (COntinuED)

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

defined benefit plan

The defined benefit plan is governed by the Pension Fund Act of 1956.

Group

Former employees of the Limpopo Economic Development Agency and subsidiary Great North Transport (SOC) Limited, participate in Bonitas Medical Aid Fund, administered by Medscheme (Pty) Ltd, Kwazulu Natal Medical Scheme Resolution Heath, Sizwe Medical Fund and Community Medical Aid Scheme administered by Medscheme (Pty) Ltd, Sizwe Medical Services and AllCare Administrators (Pty) Ltd respectively.

The post-employment subsidy policy value is summarised below:

Members and their dependants are entitled to a 60% subsidy of medical aid contributions for LEDA and 70% contribution for GNT, including savings and retirement.

Great North Transport (SOC) Ltd subsidise 100% of AdmedGap contributions in retirement. The current contribution is R91 per principal member per month.

Dependants of members who die whilst in service are entitled to a 60% subsidy of medical aid contributions. This subsidy does not include any elected savings.

LEDA and Great North Transport (SOC) Ltd embarked on a reduction exercise to better manage their post-employ-ment health care liability. A consultative process was entered into with retired members who are currently in receipt of the benefit and negotiations are still ongoing. Further, as mentioned above, a resolution was passed by the Board of Directors confirming that future retirees will no longer qualify for post-employment health care subsidisation.

agency

Retired employees of Limpopo Economic Development Agency participate in Bonitas Medical Aid Fund administered by Medscheme (Pty) Ltd.

The post-employment subsidy policy value is summarised below.

Members are entitled to a 60% subsidy of medical aid risk contributions in retirement. This subsidy does not include any elected savings.

Dependants of members who die whilst in service are entitled to a 60% subsidy of medical aid risk contributions. This subsidy does not include any selected savings.

The plan is a post employment medical benefit plan.

Carrying value

Present value of the defined benefit obligation (30 951 000) (30 994 000) (16 413 000) (16 493 000)

Movements for the year

Opening balance (30 994 000) (26 880 000) (16 493 000) (15 010 000)

Interest costs (2 013 000) (2 323 000) (1 071 000) (1 071 000)

Contributions by members 2 356 000 2 152 000 1 258 000 1 258 000

Actuarial changes (300 000) (3 943 000) (107 000) (1 670 000)

(30 951 000) (30 994 000) (16 413 000) (16 493 000)


14. rEtirEMEnt BEnEfitS (COntinuED)

key assumptions used

Assumptions used on last valuation on 31 March 2014.

Average retirement age 75 74 59 60

Discount rates used 8,20 % 6,75 % 8,20 % 6,75 %

Health care inflation costs 7,37 % 6,25 % 7,37 % 6,25 %

Contribution of membership at retirement 100,00 % 100,00 % 100,00 % 100,00 %

Expected increase in salaries 9,00 % 10,30 % 9,00 % 10,30 %

Employer’s Share

The liabilities shown above are in respect of the employer’s share of medical scheme contributions.

accrued Contractual Liability

The contractual liability (contributions liability) is the present value of the employer’s share of the total expected future post-employment contributions that will become payable in accordance with the assumptions.

Sensitivity analysis

Health Care Cost Inflation:

Variation of +1% will result in an increase of 8.4% in past service contractual liabilities and a 8.7% increase in service costs. Variation of -1% will result in a decrease of 7.4% in past service contractual liabilities and a 7.8% decrease in service costs.

Mortality

Variation of +1% will result in a decrease of 804% in past service contractual liabilities and an 8.3% decrease in service costs. Variation of -1% will result in an increase of 9.1% in past service contractual liabilities and a 9.5% increase in service costs.

GrouP aGEnCY

15. LOng-tErM PrEPAiD EXPEnSES2014

r

2013

r

2014

r

2013

r

Details on pre-paid expenses of a long term nature are as per Great North Transport (SOC) Limited:

Scania Finance (Proprietary) Limited - Deposit on busses (operating lease)

non-current asset 7 375 603 134 829 - -

Current asset 9 202 527 3 275 422 - -

Total prepaid expenses 16 578 130 3 410 251 - -


16. EnvirOnMEntAL rEhABiLitAtiOn DEPOSit

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Details on the environmental rehabilitation deposit are as per Corridor Mining Resources (Proprietary) Limited:

Included in the environmental rehabilitation asset per Note 6 is guarantees paid to the Department of Minerals and Energy for the rehabilitation of mines amounting to R9 896 659 (2013: R 9 721 090).

Opening balance 9 721 090 6 211 953 - -

Increase during the year 175 569 3 509 137 - -

9 896 659 9 721 090 - -

17. invEntOriES

Raw materials, components 10 164 471 10 420 847 - -

Finished goods 41 865 490 32 882 335 1 263 224 480 461

Production supplies 2 652 141 3 380 690 152 561 77 638

54 682 102 46 683 872 1 415 785 558 099

Finished goods and raw materials amounting to R41 865 490 of a subsidiary as been stated at net realisable value. The net realisable value adjustment in cost of sales amounted to R27 808 670.

18. trADE AnD OthEr rECEivABLES

Trade receivables - rental debtors 96 203 248 69 587 029 95 542 798 68 926 579

Trade receivables - student debtors 4 737 536 4 186 637 4 737 536 4 186 637

Trade receivables - other 29 963 069 25 306 725 2 478 023 2 621 320

Employee costs in advance 556 865 1 720 360 556 865 1 720 360

Deposits 1 988 010 1 434 704 1 707 830 1 165 935

VAT 10 565 038 11 279 361 1 348 536 3 480 212

Other receivable 3 433 138 9 209 213 2 900 840 4 429 282

Provision for bad debts (68 947 090) (57 497 565) (55 863 289) (49 318 196)

78 499 814 65 226 464 53 409 139 37 212 129

Fair value of trade and other receivables

Trade and other receivables 78 499 814 65 226 464 53 409 139 37 212 129

reconciliation of provision for impairment of trade and other receivables

Opening balance (49 318 196) (39 259 018) (49 318 196) (50 111 518)

Provision for impairment (10 848 031) (18 790 496) (10 848 031) (10 054 709)

Amounts written off as uncollectable 4 302 938 8 731 318 4 302 938 10 848 031

(55 863 289) (49 318 196) (55 863 289) (49 318 196)



19. CASh AnD CASh EquivALEntS

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Cash and cash equivalents consist of:

Cash on hand 57 161 101 655 34 978 74 149

Bank balances 150 390 689 125 102 374 68 827 245 42 028 070

Short-term deposits 8 728 717 1 911 540 8 728 717 1 911 540

Bank overdraft - (4 407 286) - (4 407 286)

159 176 567 122 708 283 77 590 940 39 606 473

Current assets 159 176 567 127 115 569 77 590 940 44 013 759

Current liabilities - 4 407 286 - 4 407 286

159 176 567 122 708 283 77 590 940 39 606 473

The Agency has provided the following guarantees to the value of R553 161:

Contract number Beneficiary guarantee amount31160703105 Eskom 216 800

31160703106 Eskom 336 361

Limited cession of investment account to the value of R554 000.

Limited suretyship to the amount of R 5 million is provided by Limpopo Economic Development Agency on the bank accounts of Great North Transport (SOC) Limited.

20. DiSCOntinuED OPErAtiOnS Or DiSPOSAL grOuPS Or nOn-CurrEnt ASSEtS hELD fOr SALE

The group discontinued its operations of the SIP-Project and transfered the project to the shareholder, Limpopo Department of Economic Development, Environment and Tourism (LEDET). The assets and liabilities of the disposal group are set out below.

Profit and loss

assets and liabilities

assets of disposal groups

Property, plant and equipment 91 621 560 961 91 621 560 961

Liabilities of disposal groups

Other liabilities - 2 000 000 - 2 000 000

21. ShArE CAPitAL

authorised

409 216 005 ordinary shares at R1 each 409 216 005 409 216 005 409 216 005 409 216 005

Issued

Ordinary 409 216 005 409 216 005 409 216 005 409 216 005


22. fAir vALuE ADjuStMEnt ASSEtS-AvAiLABLE-fOr-SALE rESErvE

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

The reserve consists of changes in the fair value for available for sale investments directly attributable to other comprehensive income.

Available-for-sale financial instruments 27 910 157 20 882 873 27 910 157 20 882 873

23. BuSinESS COMBinAtiOn rESErvE

The business combination reserve accounts for the net asset value of entities amalgamated under common control for the former LIBSA, TIL and LADC. The business combination reserve will be transferred to non-distributable reserves on 1 April 2014.

Amalgamation of state owned entities 232 206 723 232 206 723 95 751 903 95 751 903

24. nOn-DiStriButABLE rESErvE

The non-distributable reserve accounts for the amalgamation of the then Gazankulu-, Lebowa- and Venda Devel-opment Corporations in 1994.

non-distributable reserve 213 334 395 213 334 395 106 034 395 106 034 395

25. OthEr finAnCiAL LiABiLitiES

at fair value through profit or loss

Total SA Limited 65 777 65 777 - -

The loan is interest free and is payable by way of a rebate of 0.08 cents per litre of petrol purchased from Total SA Limited.

non-current liabilities

Fair value through profit or loss 65 777 65 777 - -

26. finAnCE LEASE OBLigAtiOn

Minimum lease payments due

- within one year 14 662 842 29 841 138 430 731 706 520

- in second to fifth year inclusive 1 546 106 15 041 604 81 631 781 619

16 208 948 44 882 742 512 362 1 488 139

less: future finance charges (610 793) (2 676 083) (10 806) (198 797)

Present value of minimum lease payments 15 598 155 42 206 659 501 556 1 289 342

Present value of minimum lease payments due

- within one year 14 078 745 27 238 540 421 698 135 255

- in second to fifth year inclusive 1 519 410 14 968 119 79 858 1 154 087

15 598 155 42 206 659 501 556 1 289 342

non-current liabilities 2 774 566 14 178 024 79 858 363 996

Current liabilities 12 823 589 28 028 635 421 698 925 346

15 598 155 42 206 659 501 556 1 289 342


26. finAnCE LEASE OBLigAtiOn (COntinuED)

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Finance leases represent financing obtained by the subsidiary, Great North Transport (SOC) Limited from Scania Finance (Proprietary) Limited, ABSA Bank and Standard Bank for the purchase of buses and anciliary vehicles. Interest rates are linked to prime at the contract date. The average interest rate during the period was 9%. All leases have fixed repayments and no arrangements have been entered into for contingent rent. Leases are repayable in monthly installments of R2 361 643. The loans are to mature between the 2014 and 2015 financial year ends.

The residual value of 17 buses amounting to R6 447 653, for which the financing and operating lease agreements have expired will be refinanced during 2014 financial year. The residual portion of 20 operating lease buses amounting to R6 972 174 will be refinanced as they expire during the 2014 financial year.

Finance leases for LEDA represent photocopiers. The interest rate is at prime and is repayable in monthly instalments of R7 415 and R51 461 over 60 months maturing in the 2015 and 2016 financial year.

Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent.

The group’s obligations under finance leases are secured by the lessor’s charge over the leased assets. Refer note 5.

27. DEfErrED inCOME

The deferred income consists of:

Conditional funding for business support projects over the MTN project, Department of Education Sanitation Project and Technology Innovation Agency project amounting to R21 398 443 (2013: R3 462 809).

non-current liabilities 4 976 064 4 976 064 - -

Current liabilities 20 823 792 3 462 809 20 823 792 3 462 809

25 799 856 8 438 873 20 823 792 3 462 809

28. PrOviSiOnS

reconciliation of provisions - Group - 2014

oPENINg BALANCE

R

ADDITIoNS

R

REVERSED DURINg THE YEAR

R

ToTAL

R

Environmental rehabilitation 13 925 244 835 514 - 14 760 758

Provision for creditors 31 463 457 - (10 568 073) 20 895 384

Long service awards 4 012 000 874 692 - 4 886 692

49 400 701 1 710 206 (10 568 073) 40 542 834

reconciliation of provisions - Group - 2013

oPENINg BALANCE

R

ADDITIoNS

R

UTLISED DURINg THE YEAR

R


R

ToTAL

R

Environmental rehabilitation 19 783 445 - (500 000) (5 358 201) 13 925 244

Provision for creditors 1 951 735 31 463 457 (1 951 735) - 31 463 457

Long service awards 3 716 000 296 000 - - 4 012 000

25 451 180 31 759 457 (2 451 735) (5 358 201) 49 400 701


28. PrOviSiOnS

reconciliation of provisions - agency - 2014

oPENINg BALANCE

R

ADDITIoNS

R


R

ToTAL

R

Provision for creditors 31 463 457 (10 568 073) 20 895 384

reconciliation of provisions - agency - 2013

oPENINg BALANCE

R

ADDITIoNS

R


R

ToTAL

R

Provision for creditors 1 951 734 31 463 457 (1 951 734) 31 463 457

non-current liabilities 19 647 450 17 937 244 - -

Current liabilities 20 895 384 31 463 457 20 895 384 31 463 457

40 542 834 49 400 701 20 895 384 31 463 457

GrouP aGEnCY

29. trADE AnD OthEr PAyABLES2014

r

2013

r

2014

r

2013

r

Trade payables 98 835 695 76 341 046 24 094 854 29 943 472

VAT 646 550 1 130 073 - 565 060

Accrued leave pay 17 214 096 14 178 290 14 163 015 11 818 849

Accrued bonus 3 263 590 1 908 022 2 487 113 1 553 708

Accruals 12 234 346 22 478 746 934 970 1 631 949

Deposits received 33 636 703 21 449 777 8 906 577 7 242 719

Other payables 2 675 417 1 810 413 794 265 445 476

Operating lease payables 124 495 226 005 - -

168 630 892 139 522 372 51 380 794 53 201 233

Fair value of trade and other payables

Trade payables 168 630 892 139 522 372 51 380 794 53 201 233

30. rEvEnuE

Subsidies - Department of Roads and Transport 372 995 634 353 401 291 - -

Casual passenger revenue 161 676 937 174 003 161 - -

Private hire revenue 33 960 991 37 011 202 - -

Sale of goods 55 269 905 107 950 288 11 625 788 2 829 043

Rendering of services 206 383 157 695 206 383 157 695

Rental income - Investment properties 91 973 631 80 255 121 91 486 194 79 438 905

Interest received (trading) 5 107 913 4 664 369 5 107 913 4 664 369

Student training revenue 3 755 921 - 3 755 921 -

724 947 315 757 443 127 112 182 199 87 090 012


GrouP aGEnCY

31. COSt Of SALES2014

r

2013

r

2014

r

2013

r

Sale of goods

Cost of goods sold 47 467 617 101 099 785 8 558 662 3 617 806

32. OthEr inCOME

Profit and loss on sale of assets and liabilities 1 482 518 305 859 - -

Administration and management fees received 286 806 362 449 286 806 362 449

Fees earned 1 474 270 680 234 24 630 58 390

Commissions received 1 125 855 1 029 691 - 1 912

Royalties received - 198 212 - -

Rental income - Owner occupied buildings 2 705 265 1 454 715 449 845 25 145

Discount received - 13 145 - 13 145

Recoveries 13 753 307 10 281 114 9 205 692 6 710 533

Sponsorships and sundry income 19 764 859 20 888 502 12 972 641 -

Government grants 306 916 000 171 042 663 306 916 000 171 042 663

347 508 880 206 256 584 329 855 614 178 214 237

33. OPErAting (LOSS) PrOfit

Operating (loss)/profit for the year is stated after accounting for the following:

operating lease charges

Premises

• Contractual amounts 6 653 063 3 823 168 4 884 928 2 011 418

Motor vehicles

• Contractual amounts 13 157 700 9 807 487 - -

Equipment

• Contractual amounts 1 832 489 1 337 786 1 761 713 1 264 022

Lease rentals on operating lease - Other

• Contractual amounts 10 153 091 9 360 207 - -

31 796 343 24 328 648 6 646 641 3 275 440

Property, plant and equipment 1 482 518 305 859 - -

Impairment on property, plant and equipment 34 364 608 - 34 364 608 -

Amortisation on intangible assets 258 410 191 187 5 843 37 252

Depreciation on property, plant and equipment 33 969 879 41 554 110 10 756 990 5 018 927

Depreciation on investment properties 3 963 425 3 338 307 3 691 954 3 338 307

Employee costs 446 978 931 361 706 013 188 365 924 111 532 324


GrouP aGEnCY

34. invEStMEnt rEvEnuE2014

r

2013

r

2014

r

2013

r

dividend revenue

Associates - Local - - 5 531 674 2 227 404

Unlisted financial assets - Local 1 559 160 957 453 1 559 160 957 453

1 559 160 957 453 7 090 834 3 184 857

Interest revenue

Bank 3 066 039 3 414 643 491 107 719 918

Other interest 860 546 707 490 12 880 107 12 246 376

3 926 585 4 122 133 13 371 214 12 966 294

5 485 745 5 079 586 20 462 048 16 151 151

35. finAnCE COStS

Trade and other payables 1 317 - - -

Finance leases 2 183 837 3 793 345 73 283 16 559

Bank 1 640 936 196 519 3 578 10 112

Interest paid - related parties 834 583 8 386 3 863 705 2 349 552

4 660 673 3 998 250 3 940 566 2 376 223

36. tAXAtiOn

Major components of the tax (income) expense

deferred

Originating and reversing temporary differences (1 818 532) 819 579 - -

reconciliation of the tax expense

The Group, including Limpopo Economic Development Agency and its subsidiaries are exempt from income tax in terms of section 10(1)(cA)(ii) of the Income Tax Act however the subsidiaries of Corridor Mining Resources (Proprietary) Limited are not exempt from income tax.

Reconciliation between applicable tax rate and average effective tax rate applicable to the subsidiaries of Corridor Mining Resources (Proprietary) Limited.

Accounting profit (17 545 919) (8 739 033) - -

Tax at the applicable tax rate of 28% (2013: 28%) (4 912 857) (2 446 929) - -

tax effect of adjustments on taxable income

Permanent differences 79 534 115 887 - -

Tax loss not utilised 3 405 574 3 226 541 - -

(1 427 749) 895 499 - -

37. AuDitOr’S rEMunErAtiOn

Fees 14 400 695 9 421 061 8 533 085 4 118 666


GrouP aGEnCY

38. CASh (uSED in) gEnErAtED frOM OPErAtiOnS

2014

r

2013

r

2014

r

2013

r

(Loss) profit before taxation (198 501 919) (168 273 735) (78 836 714) (6 772 832)

Adjustments for:

Depreciation and amortisation 38 199 800 29 285 488 14 454 787 12 144 952

Profit on sale of assets (1 482 518) (305 859) - -

Reversal of working capital as result of amalgamation - 54 653 271 - 5 980 614

Discontinued operations (8 962 844) - (8 962 844) -

Income from equity accounted investments 113 042 200 140 447 683 - -

Dividends received (1 559 160) (957 453) (7 090 834) (3 184 857)

Interest received - investment (9 804 377) (4 122 133) (13 371 214) (12 966 294)

Finance costs 4 660 673 3 998 250 3 940 566 2 376 223

Impairment loss (reversal) 36 397 707 142 416 34 364 608 -

Movement in impairments - 7 217 684 - 7 217 684

Movements in retirement benefit assets and liabilities (43 000) 4 114 000 (80 000) 1 483 000

Movements in provisions and impairments (22 031 736) 22 940 237 1 816 631 28 781 438

non cash deferred income from amalgamation - (67 283 901) - (67 283 901)

Financial assets - fair value adjustment 7 211 972 184 688 7 211 972 184 688

Inventories (6 715 097) (38 915 842) (857 686) (100 044)

Trade and other receivables (14 536 548) (24 141 565) (16 197 010) (24 682 876)

Prepayments - 2 306 947 - 669 733

Registration costs for reposessed property - (10 812) - -

Trade and other payables 29 610 190 32 007 594 (1 820 440) 16 636 606

Deferred income 17 360 983 (5 342 376) 17 360 983 (5 342 376)

Movement in deferred taxation (1 818 533) 895 499 - -

Movement in environmental deposits (175 569) (3 509 137) - -

(19 147 776) (14 669 056) (48 067 195) (44 858 242)


GrouP aGEnCY

39. BuSinESS COMBinAtiOnS2014

r

2013

r

2014

r

2013

r

aggregated amalgamation of state owned entities

Biological assets - 1 736 414 - 1 736 414

Investment property - 7 361 281 - 7 350 511

Property, plant and equipment - 137 391 302 - 68 824 962

Intangible assets - 142 818 - 140 702

Investments in subsidiaries - 4 340 100 - 4 340 100

Depreciation of work in progress – plant and machinery not taken into account previously - (2 079 459) - (2 079 459)

Other financial assets - 10 613 493 - 10 550 896

Prepayments - 669 733 - 669 733

VAT receivable - 4 508 047 - 4 072 078

Inventories - 41 322 964 - 800 348

Loans to related parties - (6 042 851) - 670 205

Trade and other receivables - 5 917 558 - 4 111 217

Cash and cash equivalents - 114 663 863 - 73 716 049

Finance lease obligation - (1 214 948) - (1 214 948)

Deferred income - (67 283 901) - (55 277 901)

VAT payable - (823 333) - -

Loans from shareholder - - - (6 042 851)

Trade and other payables - (19 016 358) - (16 616 149)

Total identifiable net assets - 232 206 723 - 95 751 907

Business combination reserve previously reported - (234 286 182) - (97 831 366)

Business combination reserve adjusted with work in progress depreciation prior to amalgamation - 2 079 459 - 2 079 459

- - - -

net cash outflow on acquisition

Cash acquired - 114 663 863 - 73 716 049

40. COMMitMEntS

operating leases – as lessee (expense)


- within one year 37 747 459 9 010 163 3 477 211 8 002 900

- in second to fifth year inclusive 106 603 699 3 996 148 1 118 471 1 513 895

144 351 158 13 006 311 4 595 682 9 516 795

The Agency leases office equipment on a three-year operating lease contract. No escalation is in place over this rental agreement.

The group leases office equipment, property and buses under operating lease. The operating leases typically run for a period of five years. Lease payments are fixed and paid monthly. The buildings are leased on a year to year basis with the current contract lasting three years.


GrouP aGEnCY

40. COMMitMEntS (COntinuED)2014

r

2013

r

2014

r

2013

r

The above contractual agreements of buses exclude the residual values of agreements which have and are expired between 2014 and 2018 financial year-ends to the value of R11 676 625 (2013: R25 040 358). Great North Transport has the option to continue using the buses but will then have to refinance these residual values.

Operating lease payments represent rentals payable by the group for certain of its office properties. Leases are negotiated for an average term of seven years and rentals are fixed for an average of three years. No contingent rent is payable.

operating leases – as lessor (income)


- within one year (69 293 727) (80 952 452) (69 293 727) (80 952 452)

- in second to fifth year inclusive (19 668 450) (5 452 510) (19 668 450) (5 452 510)

(88 962 177) (86 404 962) (88 962 177) (86 404 962)

other commitments

- within one year 28 122 498 -

- between 2 to five years 22 881 610 -

51 004 108 -

41. COntingEnCiES

The following contingencies are in place, and are stipulated in the financial statements of the subsidiaries of the Group namely LEDA; Risima Housing Finance Corporation (Proprietary) Limited and Corridor Mining Resources (Proprietary) Limited.

Great north transport (SoC) Ltd

Litigation is in process against the company by eleven (11) former employees relating to labour disputes. The total claims is estimated at R3.4 million.

Litigation is in process against the company by middle management for their outstanding promotion arrears. The amount of the claim is estimated at R300 000.

Litigation is in process against the company by Mnisi Lucia/State for a motor vehicle accident involving a GNT bus were a police official died and the police vehicle was written off. The amount of the claim is R3 million.

Litigation is in process against the company relating to the loss of income, suffering/trauma and medical expenses, after an employee was shot at by another employee on company premises. The amount of the claim is R3.5 million.

Litigation is in the process against the company by a former employee. The former employee is claiming that the company used his named on a bus without his permission. The amount of the claim is R1.8 million.

Lititgation is in the process against the company for injury caused. The delict arose from alleged driver negligence. The amount of the claims cannot be estimated.

Litigation is in the process against the company by TAWUSA O.B.O members. These employees sued the company to pay back-pay of 10% for the past three years for housing/ sleeping/sweeping/standby allowance and S&T allowance. The amount of the claim is estimated at R1 million.

Litigation is in process against the company by Umvuso Energy. The amount of the claim is R7 million.

Litigation is in process against the company by Kgaphola Investments. The disputes is for bus routes. The amount of is the claim is R29 million.


41. COntingEnCiES (COntinuED)

Management is of the opinion that, after consultation with the company’s legal advisors, the above claims, which amount to an estimated total of R 49 million, against the company will not succeed and has therefore not provided for any losses.

Contingent asset: Litigation is in the process by GNT against two (2) service providers (Tirhani Auctioneer and Nationwide Media). The company is suing for an outstanding debt of R1.3 million.

Corridor Mining resources (Proprietary) Limited

A service provider has instituted a claim of R7 834 000 against the company for services rendered. Management is of the opinion that the claim will be unsuccessful, and therefore no provision was made for this amount.

Limpopo Economic development agency

LEDA Agribusiness division (former LADC) has a contingent liability in respect of a legal claim against the corporation arising from a dispute with Rambau and 25 others for unlawful retrenchment in 2002. The corporations lawyers are defending the claim.an appeal case was dismissed and the must be referred for trial.the applicant failed to refer the matter to the labour court for trial. The likelihood of the action against the corporation being unsuccessful is uncertain. The estimated claim is R 2 000 000 and estimated legal fees amount to R80 000. No provision has been made for the amount as LEDA is confident in successfully defending the claim.

A claim for refund of expenses incurred by Mr J H Howell on the process of buying a stand amounting to R8 670 as the sale was not concluded due to the building belonging to LEDA was not sold. No provision has been made for the amount as LEDA is confident in successfully defending the claim.

Litigation is in process by a number of clients on the refund of a loan to purchase a property amounting to a total of R869 548. The Agency’s lawyers and management consider the likelihood of the action against the Agency being successful as unlikely as the matter will be settled.

Litigation is in process due to a tenant claiming refund of his rental deposit amounting to R29 000. LEDA has lodged a counter claim in excess of the deposit due to arrear rental amounts. No provision has been made for the claim as LEDA is confident in successfully defending the claim.

Litigation is in process against LEDA due to repairs of vandalised property before transferred to the owner who bought the property. The current owner has since passed away and we waiting for the appointment of an executor in order to substitute the deceased in the litigation proceedings. No provision has been made for the claim as the outcome and final amount cannot be confirmed.

Litigation is in process against LEDA due to unjust enrichment and damages due to a claim from a client amounting to R909 000. No provision for the claim has been made as LEDA is confident in successfully defending the claim.

Litigation is in process against LEDA due to advertising costs for the former LIBSA due to non-payment. No provision has been made for the amount as LEDA is confident in defending the claim successfully.

Litigation is in process against LEDA due to executive managers being appointed whereafter the shareholder issued a letter to cancel these appointments. No amount can be estimated at this stage and no provision has been made as LEDA is confident in defending the claim successfully.

risima Housing Finance Corporation (SoC) Limited

Loan funding commitments

The entity has incurred commitments to provide housing loan financing amounting to R15.9 million at year end (2013: R20.8 million) The entity has cash resources amounting to R18.3 million as included in Note 19 to fulfill these commitments.


GrouP aGEnCY

42. rELAtED PArtiES2014

r

2013

r

2014

r

2013

r

relationships

Holding entity (Group and Agency) Limpopo Department of Economic Development, Environment and Tourism (LEDET)

Subsidiaries (Group and Agency) Refer to note 10 and 7

Joint ventures (Group and Agency) Refer to note 10 and 8

Associates (Group and Agency) Refer to note 10 and 9

Sub-subsidiaries (Group and Agency) Refer to note 50

Directors and key management (executive managers) (Group and Agency) Refer to note 43

Subsidies received (Great north Transport and Group only) Limpopo Department of Roads and Transport

Permission to occupy land for agricultural purposes (Group only) Limpopo Department of Agriculture

Post employment benefit plan for employees of entity and/or other related parties (Group and Agency)

Multikor Southern Life Metropolitan Life Medscheme(Refer to note 14 for further details)

related party balances

Loan accounts - owing (to) by related parties

Bolepo Holdings (Proprietary) Limited (21 408 098) (17 176 222) - -

related party transactions

Subsidies received

Limpopo Department of Roads and Transport 253 858 402 237 036 374 - -

Interest paid / (received) - related parties

Capitol Hill (Proprietary) Limited - - (4 546 373) (4 555 838)

VDC Investments (Proprietary) Limited - - 3 151 124 (2 599 372)

ASA Metals (Proprietary) Limited - - (4 659 521) (4 683 416)

Mahube Mining (Proprietary) Limited - - (3 358 711) (3 100 859)

Mokopane Mall (Proprietary) Limited - - (428 698) (431 301)

Grant received

Limpopo Department of Economic Development, Environment

and Tourism (LEDET) 306 916 000 171 042 663 306 916 000 171 042 663

Grants paid to subsidiaries

Venteco (Proprietary) Limited - - 28 858 500 -

Mununzwu (Proprietary) Limited - - 8 000 000 -


43. DirECtOrS’ AnD PrESCriBED OffiCEr’S EMOLuMEntS

2014: Executive directorEMoLuMEntS

r

travEL aLLoWanCE

r

totaL

r

Mr L Masia (Managing Director) 2 619 786 96 000 2 715 786

2013: Executive directorEMoLuMEntS

r

travEL aLLoWanCE

r

rEIMBurSIvE travEL

r

totaL

r

Mr L Masia (Managing Director) 2 487 428 96 000 42 176 2 625 604

2014: non-executive directors

dIrECtorS’ FEES

r

SuBSIStEnCE and travEL

r

totaL

r

Mr M Lekota (Chairman) 484 570 31 654 516 224

Mr D Kourtoumbellides (Deputy Chairman) 477 544 7 449 484 993

Mr SV Chepape 445 189 69 623 514 812

Mr SC nkadimeng 494 152 34 477 528 629

Ms K Maroga 247 102 60 744 307 846

Mr M Maphutha 172 402 67 374 239 776

Ms MA Mphahlele 222 502 7 598 230 100

Mr T nkoana 137 462 37 522 174 984

Mrs M Moetlo 44 178 9 960 54 138

Mr M Madzivhandila 307 017 41 716 348 733

Ms HB Khan 503 690 5 404 509 094

Ms V Manyama-Matome 66 266 6 942 73 208

Mr TC Luvhani 291 953 8 083 300 036

Mr ME Maluleke 78 836 17 946 96 782

Ms MO Moganedi 98 515 13 017 111 532

Ms DM Lerutla 167 190 8 986 176 176

Mr TC Mhlaba 108 956 5 057 114 013

Mr SR Monakedi 162 650 7 655 170 305

Mr DS Simelane 78 836 10 199 89 035

Ms M Mosidi 117 256 - 117 256

Mr SM Setlhako 44 178 16 844 61 022

Mr MS Ralebipi 115 230 4 135 119 365

Ms M Ramusi 53 693 4 324 58 017

Mr TM Rathogwa 44 178 9 836 54 014

Mrs LJ Fosu 44 178 1 635 45 813

5 007 723 488 180 5 495 903


43. DirECtOrS’ AnD PrESCriBED OffiCEr’S EMOLuMEntS (COntinuED)

2013: non-executive directors

dIrECtorS’ FEES

r

totaL

r

Ms nH Mkhumane (Chairperson) 1 175 724 1 175 724

Mr D Kourtoumbellides (Deputy Chairman) 999 079 999 079

Mr Mn Kgathi 99 203 99 203

Mr M Maphutha 883 126 883 126

Ms LPV Malumbete 933 662 933 662

Ms JP Maduna 177 177 177 177

Mr M Madzivhandila 952 058 952 058

Ms HB Khan 380 053 380 053

Mr TC Luvhani 218 965 218 965

Mr ME Maluleke 869 716 869 716

Ms DM Lerutla 128 239 128 239

Mr TC Mhlaba 232 921 232 921

Mr SR Monakedi 117 697 117 697

Mr DS Simelane 61 822 61 822

Ms M Mosidi 90 678 90 678

Ms MO Moganedi 77 041 77 041

Ms V Mothema 76 696 76 696

Mr MS Muhlarhi 80 473 80 473

Ms L Sennelo 719 842 719 842

Mr SM Sethlako 229 954 229 954

8 504 126 8 504 126

2014: Members of executive managementSaLarY

r

travEL

r

BonuS

r

totaL

r

Mr S Mafadza 2 743 947 12 496 - 2 756 443

Mr STM Phetla 2 089 927 29 980 318 221 2 438 128

Mr LP Kekana 1 904 491 2 807 290 499 2 197 797

Mr J Shirinda 2 086 652 - - 2 086 652

Ms ML Kekana 1 907 893 54 099 290 499 2 252 491

Mr D Mamphitha 2 504 086 15 924 - 2 520 010

Adv TI Rakgoale 1 900 115 43 671 268 153 2 211 939

Mr RR Mpe 1 495 921 19 253 - 1 515 174

Mr D Monakedi 1 473 413 50 275 109 963 1 633 651

Mr MP Sebatjane 1 347 210 32 962 - 1 380 172

Ms BL Mathebula 972 915 32 125 196 572 1 201 612

Mr ZW Mthethwa 1 289 485 47 748 94 719 1 431 952

21 716 055 341 340 1 568 626 23 626 021


43. DirECtOrS’ AnD PrESCriBED OffiCEr’S EMOLuMEntS (COntinuED)

2013: Members of executive managementSaLarY

r

travEL

r

BonuS

r

totaL

r

Mr S Mafadza 1 963 759 50 752 396 233 2 410 744

Mr STM Phetla 2 214 137 36 378 423 209 2 673 724

Mr LP Kekana 1 811 802 4 493 292 299 2 108 594

Mr J Shirinda 1 863 853 - 490 602 2 354 455

Ms M Kekana 1 698 689 73 420 112 657 1 884 766

Mr D Mamphitha 372 279 - - 372 279

Adv TI Rakgoale 1 809 718 45 433 275 354 2 130 505

Mr RR Mpe 443 087 - - 443 087

Ms n Rampedi 992 628 22 240 - 1 014 868

Ms MC Mokoma 939 971 36 848 48 880 1 025 699

Mr MD Monakedi 1 409 879 23 508 82 620 1 516 007

Mr n Kekana 455 027 20 018 - 475 045

Mr MP Sebatjane 1 397 771 98 400 - 1 496 171

Ms BL Mathebula 1 175 193 17 932 - 1 193 125

Mr n Mohlele 310 631 - - 310 631

18 858 424 429 422 2 121 854 21 409 700

GrouP aGEnCY

44. PriOr PEriOD ErrOrS2014

r

2013

r

2014

r

2013

r

Limpopo Economic development agency (agency and Group)

In the financial years preceeding the reporting period and comparative figures, the Agency and Group did not take into account the residual values, useful lives and depreciation rates of items of Investment Properties, Property, Plant and Equipment and Intangible Assets in all instances. Further items of Investment Properties, Property, Plant and Equipment and Intangible Assets were depreciated to R1 values. The useful lives and residual values were not appropriately considered.

Plant and machinery (within Property, Plant and Equipment line item) was not depreciated over the useful live since the date that the asset became ready for use as intended by management. The work in progress plant and machinery and buildings were transferred to plant and machinery and depreciated correctly in the period affecting pre-amalgamation profits and is disclosed in the note to the business combination above and the period of post amalgamation profits.

The correction of the error results in adjustments as follows:

Statement of Financial Position

Investment Properties - 80 910 544 - 80 910 544

Property, plant and equipment - 2 980 916 - 2 980 916

Intangible assets - 126 909 - 126 909

Opening retained earnings - (75 420 144) - (75 420 144)

Profit or Loss

Depreciation expense - (8 598 225) - (8 598 225)


GrouP aGEnCY

45. COMPArAtivE figurES2014

r

2013

r

2014

r

2013

r

Certain comparative figures have been reclassified due to the reclassification of the prior year discontinued operations and reclassifications of property, plant and equipment to intangible assets as well as biological assets to retained earnings and the reclassification of loans to group companies and related parties between short term and long term portions . Refer to the note above on prior period errors for changes made to the period before the current comparative figure.

The effects of the reclassification are as follows:

Statement of Financial Position

Biological assets - 750 000 - -

Investment properties - (3 833 166) - (3 845 145)

Property, plant and equipment - (4 020 787) - (5 314 040)

Loans to group companies - (27 262 231) - (13 163 293)

Other financial assets - 28 015 291 - -

Trade and other receivables - (1 006 996) - 19 606

Cash and cash equivalents - (19 606) - (19 606)

Discontinued operations held for disposal - 560 961 - 560 961

Business combination reserve - (2 079 459) - (2 079 459)

Retained earnings - 8 616 987 - 37 004 267

Loans from group companies - - - (13 163 293)

Long service awards provision - 279 000 - -

Deferred income - 2 000 000 - 2 000 000

Liabilities of disposal group - (2 000 000) - (2 000 000)

Profit or loss

Revenue - 8 338 974 - (10 414)

Cost of sales - (21 185 725) - -

Other income - 16 413 583 - (4 816 543)

Operating expenditure - 31 250 291 - 30 383 114

Investment revenue - (5 591 789) - -

Profit share from associates - (1 749 095) - -

Finance costs - 146 201 - -

Taxation - (198 212) - -

Loss from discontinued operations - (23 557 282) - (23 557 282)

46. riSK MAnAgEMEnt

Financial risk management

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

Liquidity risk

The group’s risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities.


46. riSK MAnAgEMEnt (COntinuED)

Group

at 31 March 2014

LESS tHan 1 YEar

r

BEtWEEn 2 and 5 YEarS

r

ovEr 5 YEarS

r

Finance lease liability (12 823 589) (2 774 566) -

Other financial liabilities - - (65 777)

Trade and other payables (168 630 892) - -

at 31 March 2013

Loan from shareholder of sub-subsidiary - - (17 176 222)

Finance lease liability (29 134 614) (13 072 041) -

Other financial liabilities - - (65 777)

Bank overdraft (4 407 286) - -


agency

at 31 March 2014

Loans from related party - - (34 256 214)

Finance liability (421 698) (79 858) -


at 31 March 2013

Loans from related parties - - (29 567 076)

Finance lease liability (363 996) (925 346) -


risk from biological assets

The group is exposed to financial risks arising from changes in egg prices. The group does not anticipate that egg prices will decline significantly in the foreseeable future. The group has not entered into derivative contracts to manage the risk of a decline in egg prices. The group reviews its outlook for egg prices regularly in considering the need for active financial risk management.

Interest rate risk

As the group has no significant interest-bearing assets, the group’s income and operating cash flows are substantially independent of changes in market interest rates.

Cash flow interest rate risk - Group

Financial instrument

duE In LESS tHan a YEar

r

duE In onE to tWo YEarS

r

Trade and other receivables 78 499 814 -

Loans to related parties 2 543 868 -

Cash in current banking institutions 159 176 567 -

Other financial assets 28 799 861 29 693 325

Finance lease liability - (2 774 566)


46. riSK MAnAgEMEnt (COntinuED)

Cash flow interest rate risk - agency

Financial instrument

LESS tHan 1 YEar

r

BEtWEEn 2 and 5 YEarS

r

ovEr 5 YEarS

r

Trade and other receivables 53 409 139 - -

Loans to related parties 3 712 583 - 85 663 103

Cash at banking institutions 77 590 940 - -

Other financial assets (421 698) (79 858) -

Credit risk

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The group only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.

Financial assets exposed to credit risk at year-end were as follows:

Financial instrumentGrouP - 2014

r

GrouP - 2013

r

aGEnCY - 2014

r

aGEnCY - 2013

r

Cash and cash equivalents 159 176 567 122 727 891 77 590 940 39 626 081

Trade and other receivables 78 499 814 62 544 948 53 409 139 37 192 523

Other financial assets 368 562 731 335 769 527 69 932 029 66 545 477

47. gOing COnCErn

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

The ability of the Agency to continue as a going concern is dependent on a number of factors. The most significant of these is that the directors continue to procure funding for the ongoing operations for the Agency with the continued support of the shareholder, Limpopo Department of Economic Development, Environment and Tourism.

48. EvEntS AftEr thE rEPOrting PEriOD

Great north transport (SoC) Limited

After the reporting date on 26 May 2014, the Board of Directors approved the condonation of fruitless and wasteful expenditure amounting to R3 280 652. The Annual Financial Statements as at 31 March 2014 were adjusted

After the reporting date on 26 May 2014, the Board of Directors approved the write off of assets identified as old and not in working condition with a carrying amount of R60 662.59. The Annual Financial Statements as at 31 March 2014 were adjusted

No other significant events after the reporting period have been noted to impact on the consolidated annual financial statements.


GrouP aGEnCY

49. irrEguLAr AnD fruitLESS AnD wAStEfuL EXPEnDiturE

2014

r

2013

r

2014

r

2013

r

Irregular expenditure

Opening balance 90 689 141 33 410 791 29 010 608 299 003

Add irregular expenditure - prior year 104 117 29 332 790 104 117 22 897 472

Add irregular expenditure - current year 49 302 785 20 214 536 6 087 612 6 457 051

Less amounts approved by the board (2 009 187) (642 918) - (642 918)

138 086 856 82 315 199 35 202 337 29 010 608

A detailed register of the groups irregular expenditure is available at Head Office in respect of all irregular expenses incurred.

details of irregular expenditure - Current year

INSTANCESDISCIPLINARY STEPS TAKEN

gRoUP 2014

R

AgENCY 2014

R

Payments made while service level agreements have expired 69 none 19 221 152 3 160 046

Procurement policy not followed as deviation from policy was

not acceptable 83 none 22 418 038 2 927 566

Payments to officials not in line with HR policy 1 none 663 595 -

Total irregular expenditure for the current year 49 302 785 6 087 612

Fruitless and wasteful expenditure

Opening balance 4 322 852 3 593 624 1 402 285 468 557

Add fruitless and wasteful expenditure - prior year 885 303 - 807 176 -

Add fruitless and wasteful expenditure - current year 6 329 003 729 228 2 476 237 933 728

less amounts condoned by the Board (5 978 625) - - -

5 558 533 4 322 852 4 685 698 1 402 285

A detailed register of the groups fruitless and wasteful expenditure is available at Head Office in respect of all fruit-less and wasteful expenses incurred.

analysis of fruitless and wasteful expenditure awaiting condonation per age classification

GrouP aGEnCY

2014

r

2013

r

2014

r

2013

r

Current year (less than 6 months) 3 284 426 366 546

Current year (6 months to 12 months) 3 049 057 1 622 059 3 049 057 132

Prior year (above 12 months) 1 270 095 2 700 793 1 270 095 1 270

7 603 578 4 322 852 4 685 698 1 402


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nOtES

Limpopo Economic DEvELopmEnt AgEncy

Enterprise Development House, Main Road, Lebowakgomo, 0737Tel: +27 15 633 4700 - Fax: +27 15 633 4854 - Email: [email protected]

www.lieda.co.za

ISBN: 978-0-621-42981-7 RP253/2014

annual report 2013/14 - ce r

Documents