DEVELOPING PEOPLE INDUSTRIES AND PLACES

Transcription

1 DEVELOPING PEOPLE INDUSTRIES AND PLACES

2 MESSAGE FROM THE MEC The creation of a developmental state able to effectively support the economic and social needs of the people of South Africa is one of the key tenets of our Government s national development strategy. An effective developmental state has the ability to address our legacy of apartheid, colonialism and patriarchy, and also has the capacity to act as a driving force for the socioeconomic change that is so essential to the overall transformation of our country. Hon. Pitsi Moloto The Limpopo Provincial Government is, in accordance with the broad objectives laid out by the National Government, developing a sector specific economic growth plan. This plan will lay out an integrated approach to the economic development of the Province, and will cover the following elements: Industrial Development Programme Mining and Minerals Beneficiation/Downstream Industries Programme Broad-Based Economic Empowerment Programme Tourism Development and Transformation Programme Enterprise (Cooperatives and SMME) Development Programme Regional Economic Development and Integration Programme Wild Trade Development and Transformation Programme Investor Promotion and Cultivation Programme LimDev has been specifically mandated to support the Limpopo Government in its efforts, with a general focus on stimulating economic activity in the Province, and a specific focus on nurturing SMME activity within the Limpopo region. SMME activity is a key area of strategic importance, both nationally and within Limpopo Province. This is especially true within the current global economic context - which remains variable and uncertain. Indeed, as in many parts of the world, the impact of the negative global context on the national economy has been profound. Job losses within the formal sector continue to occur as a result of the slowdown, and while the national economy has recovered somewhat from the extreme depths of 2008/2009, a full recovery is not yet a certainty, given the complexity of the current global paradigm. Within this context, the ability of regional economies such as Limpopo s, to foster an active and vibrant SMME sector is absolutely pivotal to creating a viable buffer for citizens against the challenges resulting from the currently troubled global context. A vibrant SMME sector is definitive in terms of unemployment and poverty levels, but it also impacts significantly on the long-term socio-economic fabric of a community, reducing overall reliance on a few labour intensive sectors and creating opportunities to develop new zones of higher value economic activity within the Province. The development of skills and abilities within the Province s emerging and established business sectors plays a very important role in our collective ability to create a developmental state and ultimately puts in place a socio-economic foundation which is able to significantly grow the prospects of Limpopo s future generations. The development of the Limpopo SMME sector as a whole, therefore requires ongoing skills development within the region in a number of key areas, and such development must be facilitated by relevant and appropriate agencies. It is for these reasons that LimDev is such an important Enterprise within the Limpopo Province, and why its work has the potential to be a decisive and influential factor in our economic evolution. To illustrate, Limpopo Province enjoys a rich natural resource heritage - one that historically has not benefitted all the people of the Province. LimDev is making ongoing progress in structuring commercial partnerships with relevant local and international private sector players. These partnerships have the capacity to exploit natural resources such as mineral wealth in a sustainable manner that ultimately benefits our local communities in the long-term. 2

3 LimDev also continues to play a critical role in helping emerging business. Risima - a subsidiary company of LimDev - has funded the purchase of many houses for professionals living in rural areas. The company injected a total investment of R230.4 million into housing properties, effectively bridging the home loan market gap between RDP housing and the commercial banks. Equally, the Enterprise is negotiating the redevelopment of five major shopping centres: Thohoyandou Giyani BA 32 Makhoma Complex Giyani BA 67 Chachulani Complex Bindzulani Lulekani After the redevelopment process is completed, the centres will have facilitated a good number of permanent jobs. The 2010/11 Period will usher in a new streamlined entity which will be the amalagamation of LimDev, Trade and Investment Limpopo and the Limpopo Business Support Agency. This merger is specifically aimed at consolidating the resources of the individual organisations resulting in an intensely focused development enterprise. These are just a few examples of the work LimDev carries out in support of the growth of Limpopo s developmental process. This report shows that LimDev has operated within a difficult economic context, and that its activity has plateaued in the year under review. I believe this is to be expected in such times. I have no doubt, however, that the Enterprise remains very well positioned to aggressively increase its investments in the Province as global conditions improve, and that it will maintain its existing track record of impacting positively on the socio-economic trajectory of Limpopo in the years ahead. Much hard work remains, but we are most certainly on the right track. Thank you, Pitsi Moloto Member of the Executive Council Department of Economic Development, Environment and Tourism 3

4 TABLE OF CONTENTS 1. Message from the MEC 2 2. Corporate Profile 5 3. Organisational Structure 7 4. Chairperson s Overview 8 5. Board of Directors Managing Director s Report Executive Management Economic Outlook Programme One: SMME Development Programme Two: Project Development and Property Management Programme Three: Mining Development Programme Four: Utilities and Public Transport Programme Five: Corporate Services Annual Financial Statements 29 a. General Information / Index 30 b. Independent Auditor s Report 31 c. Report of the Board Audit Committee 33 d. Accounting Authority s Responsibility 34 e. Report of Accounting Authority 35 f. Statement of Financial Position 36 g. Statement of Comprehensive Income 37 h. Statement of Changes in Equity 38 i. Statement of Cash Flows 40 j. Accounting Policies 41 k. Notes to the Group Annual Financial Statements 47 l. Annexure A 76 m. Annexure B 77 n. Annexure C 78 o. Annexure D 79 p. Annexure E 80 q. Annexure F Abbreviations Limpopo Provincial Map Contact Details / Addresses INSIDE BACK COVER 4

5 LIMDEV S PROFILE LimDev is a juristic body established in terms of the Northern Province Development Corporation 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, Act No. 1 of 1999, (as amended by Act No. 29 of 1999). LimDev s mandate is to provide development finance to Small, Micro and Medium Enterprises (SMMEs) to stimulate the growth and development of the Limpopo economy. STRUCTURE A holding Company structured in terms of various wholly-owned subsidiaries and Strategic Business Units, supported by value-adding support services. A company providing funding for its subsidiaries and SBUs and expecting a return on capital. A socially responsive entity run on sound corporate governance principles. VISION To be a pre-eminent catalyst and partner in the economic growth and empowerment in Limpopo. MISSION To establish and advance a sustainable small and medium enterprise sector through the provision and facilitation of business and investment opportunities by providing finance to our subsidiaries and SBU s to facilitate: Industrial and economic development Employment creation Acceleration of Broad-Based Black Economic Empowerment (BBBEE) to the benefit of all our stakeholders VALUES SERVICE EXCELLENCE Principle: LimDev offers excellent service through optimum utilisation of our resources INTEGRITY Principle: Honesty and adherence to strong moral and corporate governance principles COMMITMENT Principle: We are dedicated to clients, to productivity, to empowerment and to sustainable economic development INNOVATION Principle: Striving to introduce new products and services which are responsive to the needs and aspirations of the people of the Province TRANSPARENCY Principle: We will conduct our business in a manner that will allow information to transcend openly, whilst always respecting confidentiality 5

6 MANDATE NORTHERN TRANSVAAL CORPORATION AMENDMENT ACT NO. 4 OF 1995/3: Subject to the provisions of subsection (2) the objective of the development corporation shall be, in consultation with the executive council, to encourage, plan, finance, coordinate, promote and carry out the development of the Province and its population, either directly and indirectly, in the fields of agriculture, commerce, industry, mining, training, tourism, public transport, and other business undertakings as well as in the fields of housing, economic and community development. The mandate allows LimDev to plan, establish, finance, coordinate, and carry out business in the following fields: Agriculture Commerce Industry Mining Training Tourism Public Transport Housing Other business, economic & community development In order to facilitate economic development in the SMME sector in Limpopo, the Enterprise endeavours to: Reduce unemployment through Enterprise Development Finance in mandated SMME sectors Mobilise investments in economic growth through project development, acquisitions and divestment Provide infrastructure through industrial, commercial and residential property, acquisition and management Facilitate rural housing development through the provision of loans Exploit opportunities in mining ventures Exploit opportunities in passenger transport Ensure financial sustainability of LimDev through best practice risk management; and Value-adding support services. OPERATING MODEL LimDev operates Strategic Business Units (SBUs) and Subsidiaries run as profit centres. These are supported by Shared Services. Strategic Business Units Enterprise Development Finance (EDFD) EDFD provides SMMEs with the financial flexibility required to start, develop and expand their business. Project Development and Property Management Project Development facilitates economic development through the identification and development of opportunities into sustainable business ventures. The property management department attends to the management of LimDev s property portfolio in support of economic development and advances the objectives of BBBEE. KEY Subsidiaries Risima Housing Finance Corporation Risima was established with a mandate to provide home loan finance to the people of Limpopo. Great North Transport (GNT) GNT provides essential transport services to the people of Limpopo. Corridor Mining Resources (CMR) CMR is a resource company operating in the areas of mining management and investment. OTHER Subsidiaries Capitol Hill (Pty) Ltd Kulungisa (Pty) Ltd Mapulaneng Investment Enterprise (Pty) Ltd VDC Investments (Pty) Ltd Support Services SUB-Subsidiaries Kodumela Mining (Pty) Ltd Sefateng Chrome (Pty) Ltd Khumong Chrome (Pty) Ltd Fumani Green Stone (Pty) Ltd Tshepong Chrome (Pty) Ltd Autumn Spar Trading 625 (Pty) Ltd The following support services are provided to SBUs and Subsidiaries: Finance and Accounting Division Finance and Accounting Information and Communication Technology Procurement Corporate Services Division Legal Services Human Resources Marketing and Communication Administration Internal Audit Department 6

7 ORGANISATIONAL STRUCTURE FIGURE 1: ORGANISATIONAL STRUCTURE BOARD OF DIRECTORS Managing Director s Office COMPANY SECRETARY INTERNAL AUDIT Finance & ACCOUNTING SERVICES Corporate Services DEVELOPMENT FINANCE Project DEVELOPMENT & PROPERTY MANAGEMENT Subsidiaries* FinancIAL SERVICES Human Resources SMME FINANCE PROPERTY MANAGEMENT Corridor Mining Resources Accounting Services AdminISTRATION CREDIT RISK Project DEVELOPMENT Risima Housing Finance CORPORATION INFORMATION TECHNOLOGY LEGAL SERVICES Great North Transport * The above structure indicates significant subsidiaries only Marketing & Communication 7

8 CHAIRPERSON S OVERVIEW LimDev has held its course over a globally challenging economic period. As this report reflects, the Enterprise s activity levels receded relative to previous years in response to this extremely sluggish operating context. LimDev, however, remains structurally well placed. It continues to grow its operational ability and retains the bottom line wealth necessary to ensure effective support for local business people in challenging conditions and to enable them to prosper as the economic climate improves. Mr P J Malabela Macro outlook Since the beginning of the global economic crisis in 2008, countries across the world have been attempting, with various degrees of success, to negotiate an economic paradigm characterised by, above all else, close economic inter-dependence. In this new context, the fortunes of various national economies are fundamentally inter-locked. While there are signs of a global recovery from the lows of 2008, these are not definitive, and structural concerns remain in evidence in the major economies such as Europe and the USA. Considering that the European Union is our biggest trading partner, this new inter-locking global context means that the South African economy can expect ongoing growth challenges in the formal sector over the medium term. It is reasonable to expect these challenges to impact particularly significantly on areas such as the Limpopo Province, due to the fact that they are still in the nascent stages of the development of a sustainable socio-economic structure. Local context Within the context of a likely slow recovery from the impact of the global crisis, many of South Africa s most significant economic challenges are directly related to its troubled socio-economic past. As a result, issues such as skills shortages, infrastructure development, access to finance by small businesses as well as crime and unemployment have to be addressed in a holistic manner - one aligned to South Africa s ultimate strategic objective of fostering a genuinely developmental state. Thus, while Foreign Direct Investment necessarily plays an important role in stimulating general economic activity in Limpopo, the potentially positive impact of foreign inflows will only be maximised by a society already aggressively growing its own capacity to service clients. Improved FDI levels will therefore need to be matched by improved Local Direct Investment levels if South Africa is to grow its profile as a competitive global economy over the medium term. Looking forward, ongoing pressure on the cost of wage labour across all sectors is likely to combine with a spiralling base line cost of electricity to place significant inflationary stress on the national economy. The successful continuation of the country s infrastructure development programmes will be central in managing these inflationary stresses. Equally, existing investments in developing a strong, empowered and skilled national entrepreneurial framework will need to be maximised for the country to successfully negotiate a gradual recovery. The South African Economy - Looking Forward The tasks of improving allocative efficiency and raising productivity extend well beyond the realms of competition policy into other business environment issues. These include infrastructure, skills shortages, crime and small business access to finance. Problems in each of these areas can only work against the growth of exports and FDI since they add to the average cost of doing business in South Africa relative to its peer group. South Africa: Second Investment Climate Assessment Improving the Business Environment for Job Creation and Growth World Bank, July

9 LimDev review LimDev has progressed steadily in its activities, given the challenging operational context. The Enterprise has made notable progress in its approach to Corporate Governance and reporting, with this report marking a significant shift to a more targeted, goal orientated approach, allowing for a clear, year-on-year assessment of activities, goals and achievements. For the period under review, for example, the new methodology reveals clear areas of required focus within the Enterprise. These areas of under-performance will be aggressively targeted in the year ahead. GNT LimDev experienced the direct impact of the wage labour pressures referred to earlier after financial year end, with staff at one of our subsidiaries, GNT, going on strike for a period of two weeks. This impacted negatively on GNT s performance during the period. Single Development Agency LimDev s primary shareholder (government) has indicated its intention to form a single development agency for the Province, in an attempt to harness and consolidate the activities of three strategically aligned agencies. LimDev s operations will thus be merged with those of the Limpopo Business Support Agency (LIBSA) and Trade and Invest Limpopo (TIL). The proposed merger holds exciting growth and development opportunities for all three agencies, and will also create significant opportunities to optimise costs through the leveraging of central, shared services common to all agencies. Limpopo employment growth and development plan (LEGDP) The Limpopo Employment Growth and Development Plan (LEGDP) is a means of building an economy which is informed by the electoral mandate bestowed on the ruling party, the African National Congress (ANC). The plan identifies areas that are able to sustain our economy and those that require immediate interventions. The Limpopo employment growth and development plan s primary objective is to move our economy into an industrialisation route that is responsive to the: Diversification of the Province s industrialisation path and movement towards a knowledge economy Promotion of more labour absorbing industrial sectors, with an emphasis on tradeable labour absorbing goods and services and economic linkages that catalyse productive employment creation Promotion of a broader based industrialisation path that is characterised by greater levels of participation of historically disadvantaged people, and marginalised regions in the mainstream of the industrial economy. Provincial economic overview by Cassel Mathale, Premier of Limpopo The Managing Director, Mr Stan Mathabatha s contract expired after financial year end. I would like to take this opportunity to thank him for the years he has spent building LimDev and we wish him well in all his future endeavours. Mr S. T. M. Phetla will take over the reigns as the Acting Managing Director. Appreciation I would like to offer my sincere appreciation to everyone working at LimDev for the effort they have put in during the year under review. Economic conditions have been extremely challenging, and it is only through significant commitment from all staff that LimDev can build a strong foundation. Special thanks must go to the Members of the Board for the guidance they have offered the Enterprise during this time. Mr P J Malabela Chairperson 9

10 BOARD OF DIRECTORS Chairperson: P J Malabela Academic Qualifications: Board Leadership Programme - GIBS LimDev Chairperson as from: 1 st February 2009 Deputy Chairperson: N H Mkhumane Academic Qualifications: B.Comm Diploma in Law of Associates Harvard Programme of Capital Projects Appraisal - Queens University, Canada Executive Management Development Programme - Wits Business School Board Leadership Programme - GIBS LimDev Deputy Chairperson as from: 1st February 2009 LimDev Director as from: 1 st July 2005 Managing Director: C S Mathabatha Academic Qualifications: BA - University of the Western Cape Higher Diploma in Education - University of the Western Cape Masters Degree in Development - UNIN PMD - Harvard Business School, USA PIAM - Harvard University, USA Board Leadership Programme - GIBS LimDev Executive as from: 1 March 2003 LimDev Director as from: 1 st July 2005 Director: S V Chepape Academic Qualifications: Community Based Development - UNISA Certificate in Business Management & Personal Management - The Business Institute Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 Director: D Kourtoumbellides Academic Qualifications: General Certificate of Education - Britain Certificate in Bookkeeping - London Chamber of Commerce, Britain LimDev Director as from: 1 st July

11 Director: M Lekota Academic Qualifications: B. Comm - University of the North MBA - Rutgers State University of New Jersey, USA Directors Development Programme - University of the Western Cape Effective Leadership Program - University of Pennsylvania Wharton School of Business (USA) Board Leadership Programme - GIBS LimDev Director as from: 1 st July 2005 Director: D L Mabilu Academic Qualifications: B. Admin - University of the North B. Admin Honours (Development Studies) - University of the North Master in Development Studies - University of Johannesburg Diplomacy - German Institute of International Development Skills for Development - Institute for African Alternatives Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 Resigned: 31 st August 2009 Director: H K Makgae Academic Qualifications: B.A Ped - University of Limpopo B.Ed - University of Limpopo Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 Director: MM P Maleta Academic Qualifications: Diploma in Pedagogics - University of the North Bachelor of Arts - University of the North B. Ed (Hons) - University of the Western Cape M.A. Papers: Development Studies - University of the Western Cape Corporate Governance & Board Effectiveness - Institute of Directors (IOD) Board Leadership Programme - GIBS LimDev Director as from: 1 st February

12 Director: M Maphuta Academic Qualifications: Diploma - Senior Primary Teacher: Kwena Moloto College of Education Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 Director: L Masia Board Member: M E Molokomme Academic Qualifications: MBA - Wits University Advanced Business Management Programme - University of Johannesburg Executive Leadership Development Programme - Standard Bank Global Leadership Centre with Duke Executive Leadership Development Programme - Standard Bank (WINGS) with GIBS Board Leadership Programme - GIBS Technical & Financial Valuation of Mining Assets - Wits Business School Academic Qualifications: Certificate in Local Government - UNISA Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 LimDev Director as from: 1 st February 2009 Director: H A Ngubeni Academic Qualifications: Bachelor of Accounting Science - UNISA Majors Courses: Accounting & Auditing Board Leadership Programme - GIBS LimDev Director as from: 1 st February 2009 Director: L J Sennelo Academic Qualifications: Chartered Accountant - Attained in 2003 B.Comm (Acc) Hons - University of Natal B.Compt - UNISA Board Leadership Programme - GIBS LimDev Director as from: 1 st February

13 MANAGING DIRECTOR S REPORT LimDev has delivered a steady performance in challenging conditions. The impact of the global recession on the Enterprise s activities was significant, with the generally depressed state of the economy across the country affecting our ability to stimulate economic activity in the Limpopo Province. Mr C S Mathabatha Notwithstanding the depressed economic context, LimDev performed well in key management and governance areas and continues to make significant strides in positioning a robust organisational structure able to deliver positive results for the people of the Province over the long-term. Divisional review As has been articulated in our Chairperson s review, the fluid global economic context has been of central importance to the trajectory of the Limpopo economy, and thus to LimDev s activities. In the period under review, the Enterprise faced the dual challenge of negotiating the downturn in a manner that maintains its strong operational foundation, while also continuing to support regional business people through challenging trading conditions. This challenge is likely to remain in place over the short-term, as the national economy emerges from the depths of 2008/2009. The quality of the Enterprise s investments and activities is thus an important point of focus moving forward. Our shift to a more clearly target-orientated way of operating (and reporting on operations) seeks to ensure that each division makes steady, clearly defined progress in meeting the Enterprise s strategic goals, and that the success of our activities can be measured and tracked year-on-year. SMME Finance A moratorium on new staff appointments, the introduction of a range of onerous legislative measures and the generally depressed state of the national economy combined to see the SMME finance division struggling to maintain momentum. As the economy improves and as operational and strategic adjustments are made to accommodate the new legislative context, improvements are expected in the division s performance. Risima - Rural Housing Finance CORPORATION Risima continued its strong performance in this vital area of activity. The division performed above target in most areas and is well placed to continue acting as an effective bridging agency in the realm of housing finance in the future. Project Development and Property Management The Project Development and Property Management division was negatively impacted by the troubled economic context, which saw a growing number of tenants unable to meet their rental obligations. In addition, the cost of maintaining an ageing property portfolio has emerged as a factor impacting on the ability to rent properties to new tenants. Public Transport The year saw a clear reduction in the number of passengers serviced by GNT, principally as a result of the stagnant economic context. Passenger figures are expected to remain aligned to the general state of the economy in the year ahead. 13

14 Operational review LimDev retains the focus established over the last five years on optimising its operations, systems and procedures to ensure adherence to required Corporate Governance standards. The establishment of a strong internal operational framework is required not only in a regulatory sense, but also to ensure that the Enterprise s balance sheets remains healthy and able to support its investments and activities over the long-term. Within this context, and as this report clearly reflects, LimDev continues to invest in the development of its skills base at all levels. The progress made thus far is satisfying and this focus will continue in the years ahead. Communication LimDev s communications strategy remains in place and is serving the Enterprise well. Our approach centres on ensuring that the LimDev profile grows and is nurtured in areas strategically relevant to our core function and provincial presence. In addition, we seek to achieve this profile growth in the most cost effective manner possible, which means focusing on developing good partnerships in key media channels, and utilising the reach and scope of the broad LimDev network to carry out regular direct communication as frequently as possible. Appreciation I would sincerely like to thank everyone working at the Enterprise for their efforts over the year - it is only through your hard work and commitment that we are able to continue impacting as positively as we do on the evolution of the Limpopo economy. Particular thanks must go to the members of the Board for their insight and support over the period. I believe I speak on behalf of everyone in the organisation when I say that we are committed to continuing our positive impact well into the future. C S Mathabatha Managing Director 14

15 EXECUTIVE MANAGEMENT Managing Director: C S Mathabatha Academic Qualifications: BA - University of the Western Cape Higher Diploma in Education - University of the Western Cape Masters Degree in Development - UNIN PMD - Harvard Business School, USA PIAM - Harvard University, USA Board Leadership Programme LimDev Executive as from: 1 March 2003 LimDev Director as from: 1 July 2005 Executive Manager, Corporate Services until 30 November 2008 & Acting Chief Operating Officer from 1 December 2008 S T M Phetla Academic Qualifications: B. Admin - University of the Western Cape B. Admin Hon - University of the Western Cape PMD - Harvard Business School, USA LimDev Executive as from: 1 February 2005 Group Chief Financial Officer L P Kekana Academic Qualifications: B.Comm - UNISA ACMA - CIMA LimDev Executive as from: 21 November 2006 Executive Manager, Project Management & Property Development T M Madula Academic Qualifications: B.Comm - University of Venda B.Comm Hon - University of the North MBA - University of Limpopo LimDev Executive as from: 1 October 2005 Acting Executive Manager, Enterprise Development Finance M M Molepo Academic Qualifications: B.Comm - University of Venda University Education Diploma - University of Venda MBA - University of Limpopo LimDev Executive as from: 1 October

16 Acting Executive Manager, Corporate Services S N Maponya CEO, Great North Transport (Pty) Ltd M T Muneri Academic Qualifications: BA - UNISA BEd - UNISA MEd - UNISA Higher Certificate in Personnel Training & Management - Damelin Diploma in Human Resources Management - Damelin Course in Employee Wellness - University of South Africa Academic Qualifications: B.Comm - UNISA B.Comm Hon - UNISA MBA - Thames Valley University, London LimDev Executive as from: 1 st December 2008 LimDev Executive as from: 1 st September 1993 GNT CEO as from: 1 st December 2004 CEO, Corridor Mining Resources (Pty) Ltd R Shingange Academic Qualifications: B. Proc - University of the North Post Graduate Diploma Information Management - Wits Business School CMR CEO as from: 1 st August 2006 Resigned: 31 st May 2009 CEO, RISIMA Housing Finance Corporation (Pty) Ltd M J Shirinda Acting CEO, Corridor Mining Resources (Pty) Ltd N E Rampedi Academic Qualifications: B.Admin - University of the North Certificate in Business Management - Potchefstroom University Certificate in Business Consultancy - Potchefstroom University Certificate in Business Plan Development - Technikon Pretoria MBA - University of Limpopo Academic Qualifications: B. Proc - University of the North Practical Legal Training Pretoria School of Legal Practice Technical & Financial Valuation of Mining Assets - Wits Business School RISIMA CEO as from: 1 st April 2004 CMR Acting CEO as from: 3 rd July

17 ECONOMIC OUTLOOK After several years of sustained growth, for the first time since 1992 South Africa s economy fell into recession with GDP contracting by 1.8% in The economic slowdown had started already in 2008 with the weakening of domestic demand and was exacerbated when the global crisis led to a sharp fall in exports. Growth is expected to recover gradually to 2.4% in 2010, aided by the recovery of global demand and boosted by the FIFA World Cup, and should accelerate further in 2011 to 3.3%. Output in manufacturing and mining declined in 2009 as a result of lower exports and agriculture contracted because of adverse climatic conditions. The only sector that showed sustained growth was construction, boosted by a public investment programme and by the forthcoming football World Cup. In the coming years, the main policy challenge will be to strike a good balance between fostering growth, while preserving fiscal sustainability and low inflation. South Africa s economic and social outlook remains shadowed by huge structural challenges, notably deficiencies in transport and energy infrastructure, which raise production costs and limit growth potential. Public service delivery, also a severe bottleneck to growth, has proven inadequate in a period of severe economic distress and has led to significant social discontent. The global recovery is expected to be patchy and very slow, but should continue, provided stimulation packages are not withdrawn too quickly. KEY FINDINGS FOR THE FIRST QUARTER OF 2010 Real gross domestic product at market prices increased by 4,6 % quarter-on-quarter, seasonally adjusted and annualised. The largest contributions to the quarter-on-quarter growth of 4.6% were as follows: The manufacturing industry contributed 13 percentage points based on growth of 8.4% The mining and quarrying industry contributed 0.8 of a percentage point based on growth of 154%. The finance, real estate and business services industry contributed 0.5 of a percentage point based on growth of 2.5%; and The wholesale, retail, motor trade and accommodation industry and general government services each contributed 0.4 of a percentage point based on growth of 3.3% and 2.8% respectively. The unadjusted real GDP at market prices increased by 1.6% year-on-year The most notable performances of industries in the 1st quarter of 2010 compared with the 1st quarter of 2009 were as follows: the mining and quarrying industry increased by 6.5%; the construction industry increased by 5.0%; general government services increased by 4.1%; and the manufacturing industry increased by 3.1%. Key economic developments The following activities should be noted when analysing the recent performance of the economy: the growth in mining and quarrying was mainly due to increases reflected by coal mining and the mining of other metal ores; and manufacturing growth was led by strong growth in the basic iron and steel, non ferrous metal products, metal products and machinery division and the petroleum, chemical products, rubber and plastic products division. 17

18 TABLE 1: KEY LABOUR MARKET INDICATORS Population Yrs Jan-Mar 2009 Oct-Dec 2009 Jan-Mar 2010 Thousand Qtr-to-Qtr Change Yearon-Year Change Qtr-to-Qtr Change Percent Yearon-Year Change Labour Force Employed Formal Sector (Non- Agricultural) Informal Sector (Non- Agricultural) Agriculture Private Households Unemployed Not Economically Active Discouraged Work-Seekers Other (Not Economically Active) Rates (%) Unemployment Rate Employed/ Population Ratio (Absorption) Labour Force Participation Rate Note: Due to rounding, numbers do not necessarily add up to totals. Source: Statistics SA - Quarterly Labour Force Survey, Quarter One, 2010 The number of persons in the labour force decreased slightly by between Q4:2009 and Q1:2010. Table 1 shows that employment also decreased by between Q4:2009 and Q1:2010 with the formal sector losing jobs, the informal sector losing ; while Agriculture and Private households created some and jobs respectively. TABLE 2: EMPLOYMENT BY PROVINCE Jan-Mar 2009 Oct-Dec 2009 Jan-Mar 2010 Qtr-to-Qtr Change Yearon-Year Change Qtr-to-Qtr Change Yearon-Year Change Thousand Percent Western Cape Eastern Cape Northern Cape Free State KwaZulu-Natal North West Gauteng Mpumalanga Limpopo Total Note: Due to rounding, numbers do not necessarily add up to totals. Source: Statistics SA - Quarterly Labour Force Survey, Quarter One, Table 2 shows that between Q4:2009 and Q1:2010, job losses were experienced in most provinces except Western Cape and KwaZulu-Natal, which gained and jobs respectively. Limpopo accounted for of the job losses, followed by Gauteng with job losses and Mpumalanga with

19 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES PROGRAMME 1 SMME DEVELOPMENT SUB PROGRAMME 1.1 SMME FINANCE TABLE 3: SMME FINANCE Strategic Objective Key Performance Area Key Performance Indicators Target Actual Gaps Development of Thriving SMME Sector in Limpopo Providing Business Finance to SMMEs Provide 200 Loans at a value of R per loan Provide 200 loans Provided 75 loans 125 loans Under- Performance Approve R50m in loan amounts to SMMEs R50m in loan amounts Approved loans to the value of R16.48m R33.52m in loan amount Under- Performance Creation of jobs Invest R50m to facilitate 1667 existing jobs Create 1000 jobs *Created 330 jobs 670 jobs Under- Performance Maintenance of existing jobs Invest R50m to facilitate 1667 existing jobs Maintain 1667 jobs **549 jobs maintained 1118 jobs shortfall Collection of outstanding amounts Collect R110m in outstanding debts (SMME loans) R110m to be collected in the year R38.24m collected in the financial year R71.76m Under- Collection EXPLANATORY NOTES Enterprise Development Finance Division Basis of calculations: *R translates into one job created **R translates into one job maintained The under-performance in this Division can be ascribed to a number of factors including: A. Understaffing There is serious understaffing due to the moratorium on appointments of staff imposed on the Enterprise by the Shareholder. The Head of the Division has been acting for the past three years and a number of critical positions have been vacant. B. Legislative issues The introduction of legislation such as the NCA, FICA, and POCA has created an environment that requires thorough investigation into all loan applications, so as to eliminate those that do not meet the criteria for funding. As a result, this disqualifies many applicants from the constituency that we serve. C. The economic conditions The economic conditions that prevailed in the country during the past year posed a serious challenge to the granting of credit because the ability of clients to pay was adversely affected and the business outlook was grim, making the approval of loans very difficult. D. PFMA restricting on borrowing The restrictions on borrowing imposed by Section 66 of the PFMA also resulted in the slowing down of the implementation of approved business loans. We have applied for PFMA approval to access additional funding for SMMEs. 19

20 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES SUB PROGRAMME 1.2 RISIMA HOUSING FINANCE CORPORATION (PTY) LTD TABLE 4: RURAL HOUSING FINANCE Strategic Objective Key Performance Area Key Performance Indicators Target Actual Gaps To Facilitate Rural Housing Development through the Provision of Home Loans Approve 280 Housing Loans at an Average of R per Housing Loan Grant 280 Housing Loans to the Value of R50.4m per Annum Disburse 280 Loans to the Value of R50.4m Disbursed 204 Loans to the Value of R56.1m R5.7m Loans Over Target & 76 Loans Under- Performance Reduction of Unemployment in Limpopo Creation of Jobs *Create 920 Jobs Creation of 920 New Jobs 1121 Jobs Created 201 Jobs Over Target Maintenance of Existing Jobs Maintenance of 2300 Jobs Maintain 2300 Jobs 2803 Jobs Maintained 503 Jobs Over Target EXPLANATORY NOTES Basis of calculations: *R translates into one job created **R translates into one job maintained Risima HOUSING FINANCE CORPORATION (PTY) LTD Financial results for 2009/10 Income Statement Income R 31.0m Expenditure R 12.6m Profit R 18.4m Balance sheet Housing Loans (Non-current & Current Portion) R 230.5m Other Non-Current Assets R 0.3m Other Current Assets R 26.8m Total Assets R 257.6m Equity & Liabilities Capital & Reserves R 254.1m Liabilities R 3.5m Total Equity & Liabilities R 257.6m 20

21 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES PROGRAMME 2 PROJECT DEVELOPMENT AND PROPERTY MANAGEMENT SUB PROGRAMME 2.1 PROPERTY MANAGEMENT TABLE 5: PROPERTY MANAGEMENT Strategic Objective Key Performance Area Key Performance Indicators Target Actual Gaps To provide infrastructure through industrial, commercial & residential property acquisition & management Increase occupancy rate Increase in occupancy rate by additional 208 tenants 208 Tenants 20 Tenants 188 tenants Under- Performance Reduction of unemployment Create additional jobs Create additional jobs Created 143 jobs 857 jobs Under- Performance Reduction of unemployment Maintain jobs Maintain jobs Jobs maintained in rental properties 144 Jobs Under- Maintained Collection of rental Collection of current rent Collect R54m in current rent Collect R54m current rental Collected R44.7m current rental R9.3m Under- Collection Collection of arrears rental Collect R10.8m arrears rental Collect R10.8m arrears rental Collected R4.8m arrears rental R6m Under- Collection EXPLANATORY NOTES Property Management Basis of calculations: *Based on actual salary reports of tenants. 21

22 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES SUB PROGRAMME 2.2 PROJECT DEVELOPMENT TABLE 6: PROJECT DEVELOPMENT Strategic Objective Key Performance Area Key Performance Indicators Target Actual Gaps To mobilise investment in economic growth through project development, acquisitions & divestment Invest R36m to mobilise private sector investment R36m to be invested to mobilise private sector investment Invest R36m in project funding to mobilise additional private sector funding Invested R0m in project funding to mobilise additional private sector funding R36m Under- Investment in project funding to mobilise additional funding Mobilise R96m additional funding R96m additional funding mobilised R96m mobilised R0m mobilised R96m Under- Performance Job Creation Mobilise investment to create 66 jobs Invest R36m in projects to facilitate the creation of 66 jobs Invest R36m in projects to facilitate the creation of 66 jobs Invested R0m to facilitate the creation of 0 jobs* 66 jobs Under- Performance EXPLANATORY NOTES PROJECT DEVELOPMENT AND PROPERTY MANAGEMENT Basis of calculations: *R translates into one job created **R translates into one job maintained The under-performance in the year can be ascribed to, amongst others, the following issues: A. New business development The depressed economic conditions that prevailed in the reporting period were not conducive to new business development, hence the under-performance in the establishment of new tenants. Those occupying premises were also affected by same, with some even closing doors, making it even more difficult to maintain the current occupancy rate. B. Rent and arrears rent collection The recession made conditions difficult for the tenants to raise the cash flow from sales in order to keep up with their rental and arrear commitments. Most of the tenants had to be handed over to external service provider legal firms for collection. The rate of arrears remained high during the year. C. Job creation and job maintenance Tenants reduced their number of employees just to keep afloat and those that could not keep up closed shop and laid off all employees. This had a negative impact on the new employment opportunity numbers and job creation figures. As at April 2009, there were jobs and as at 31 March 2010 the number of jobs fell to This indicates a loss of 144 jobs maintained opportunities. D. Maintenance and upkeep Although the portfolio has aged somewhat, tenancy levels remain stable. E. Redevelopment The Board has approved the redevelopment of five shopping centres through a leasehold arrangement with a property developer. 22

23 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES PROGRAMME 3 MINING DEVELOPMENT CORRIDOR MINING RESOURCES INTRODUCTION Corridor Mining Resources (Proprietary) Limited (CMR), a private company wholly-owned by the Limpopo Economic Development Enterprise, is mandated to develop mining assets and focus on mining and mining related activities. KEY FOCUS AREAS CMR s key focus areas are the following minerals: Base metals Platinum Group of Metals (PGM) Industrial minerals CMR s projects are located in the areas of Sekhukhune, Giyani, Malamulele and Mokopane, of which the bulk comprises of Chrome and PGM s. PERFORMANCE AGAINST STRATEGIC OBJECTIVES TABLE 7:CMR s PERFORMANCE Programme Performance Indicators Mobilisation of investments to promote economic development & empowerment Target Investing R55m to promote economic development & empowerment Actual Performance The company has invested R104m in the current year Facilitation of BBBEE entrance in the mining industry Ensuring equity participation of HDSA through BEE entities & communities Equity participation of HDSA was ensured through CMR s participation in 9 communities and 14 BBBEE entities Facilitation of investment, both inward & outward to the company Sourcing 1 new investor & creating 1 new small scale project No new investor was sourced & no new small scale project was created Management of mining operations & services Ensuring management of mining operations & services through the management of 4 mining operations, 7 prospecting projects & job creation & retention (as per HDSA) The company managed 4 mining operations & 7 prospecting projects in the current year There were jobs (2 172 permanent jobs & 137 temporary jobs) retained. This includes 100 new jobs created in the current year EXPLANATORY NOTES Mining Basis of calculations: * The assumption is that R1m invested created 1 job 23

24 PERFORMANCE INFORMATION AGAINST PREDETERMINED OBJECTIVES PROGRAMME 4 UTILITIES AND PUBLIC TRANSPORT The role and mandate of the Company is the transportation of passengers/commuters, within the limitations of the prevailing Land and Road Transportation Acts that are driven from the National Department. The Company s operational areas are within Limpopo and Mpumalanga Provinces and consist of the following regions: Head Office - Polokwane Central Region - Seshego/Polokwane/Mokopane Western Region - Groblersdal/Marble Hall/Burgersfort Eastern Region - Tzaneen/Makhado/Giyani/Phalaborwa/Hoedspruit/Bushbuckridge TABLE 8: PUBLIC TRANSPORT PERFORMANCE Strategic Objective Key Performance Area Key Performance Indicators Target Actual Gaps To exploit opportunities in passenger transport To identify opportunities & participate in passenger transport to support economic development Provide transport facilities to 48 million passengers per annum To transport 48 million passengers per annum Transported 36 million passengers for the period 12 million passengers transported below target To collect revenue through the transportation of passengers To collect revenue as payment for transport services rendered Collect R580m per annum revenue or payments for transport services rendered Target to be collected R580m per annum Collected R458.7m Under target by R121.3m EXPLANATORY NOTES There has been a decline in passengers hence the we could not meet the target. The drop is mainly attributable to job losses in the various sectors. The recession also impacted negatively on travellers who board busses to town for shopping. The two week long strike by GNT bus drivers also contributed to the decline. 24

25 PROGRAMME 5 CORPORATE SERVICES Human Resources Staff ComplEment A total of 174 full time and temporary employees worked at LimDev at the close of the reporting period. The Enterprise s gender and race profile across different management categories, skills development initiatives, employment equity and employee wellness programmes is reflected in the associated tables and graphs: TABLE 9: MANAGEMENT LEVELS Total Race Gender Resignations/ Terminations/Deaths Black White Male Female Male Female Senior Middle Lower Temporary Employees Disability Total Resignations Terminations Deaths Senior Management 1 Senior Management 0 Senior Management 0 Middle Management 2 Middle Management 1 Middle Management 1 Lower Management 2 Lower Management 4 Lower Management 1 EXPLANATORY NOTES The staff complement of 174 is inclusive of employees of Risima Housing Finance Corporation (Pty) Ltd and Corridor Mining Resources (Pty) Ltd, but excludes employees of Great North Transport (Pty) Ltd. 25

26 Human Resources (CONTINUED) MISCONDUCT REPORT TABLE 10: FRAUDULENT LOAN APPLICATION NATURE OF THE MISCONDUCT OUTCOME DATE FINALISED STATUS Negligence in approving payments (contrary to the terms defined in the loan agreement) Final written warning Finalised Negligence in failing to detect fraudulent loan application Not guilty Finalised Negligence in failing to detect fraudulent loan application Not guilty Finalised Negligence in approving a loan without carrying out a proper documentation check, resulting in the defrauding of the Enterprise to the value of roughly R1m Final written warning Finalised Negligence in approving a loan without carrying out a proper documentation check, resulting in the defrauding of the Enterprise to the value of roughly R1m Final written warning & 1 month suspension without pay Finalised EXPLANATORY NOTES The above cases involved one incident of a fraudulent application for a procurement loan by a company which purported to have been awarded a tender to provide Tubatse Local Municipality with computers and other IT equipment. This was done by forging the appointment letter from the Municipal Manager of Tubatse. The LimDev employees were charged with negligence after it was found that, had they been more vigilant, the fraudulent action could have been avoided. 26

27 Human Resources (CONTINUED) PERFORMANCE MANAGEMENT During the period under review, the LimDev Board rewarded exceptional performance by deserving members of management in the form of performance bonuses. SKILLS DEVELOPMENT To drive alignment with the Human Resources Development Programme s key aims, LimDev ensured that each of its employees participated in learning interventions during the year under review. A new and notable development during the period was an intense Chartered Institute of Management Accountants (CIMA) learnership programme for finance staff. HUMAN RESOURCE DEVELOPMENT (HRD) The implementation of LimDev s Human Resource Development Programme is guided by the overarching LimDev Strategy, the Human Resource Development Strategy and the Workplace Skills Plan (WSP). To link these three key business elements, LimDev conducts a thorough Skills Audit, which isolates the skills required by the Enterprise and the skills possessed by job incumbents, and then isolates the gaps between the two dimensions. The results of this process inform the focus put onto each division, and on each individual, to enable divisions and individual employees to leverage deliverables as part of the LimDev Strategy. Divisions that are core to driving the LimDev Strategy are given more attention in the various programmes, as indicated in the table below. Training and other development programmes A total of R1.4m was spent on various training programmes during the period under review. Staff members attended several training programmes, which included: TABLE 11: STAFF TRAINING PROGRAMMES Course Number of Attendees Secrets of Debt Collection 20 Mineral Rights Compliance & Reporting 2 PACSA Conference 11 Corporate Governance/King III Report 3 Competency Based Recruitment 2 ACCZONE Training 7 LimDev Group Strategy Workshop 26 Corporate Services Strategy Workshop 21 Risk Management & Fraud Prevention Workshop 168 EXPLANATORY NOTES Training on Risk Management and Fraud Prevention was conducted for the LimDev Group. Educational Assistance and Bursaries LimDev has granted educational assistance in the form of finance to a number of employees to further their studies. 27

28 MARKETING AND COMMUNICATION The Enterprise seeks to grow its public profile within key market areas relevant to the provincial economy and its own existing operational focus areas. Raising LimDev s exposure in these areas ensures that the Enterprise is increasingly recognised and utilised as an economic empowerment agency by the people of the Province, and that its market impact is felt (in the form of raised levels of economic activity) across Limpopo. The Marketing and Communication Department carries out a planned and sustained programme to establish and maintain mutual understanding between LimDev and its various provincial stakeholders. The programme involves managing the organisation s media exposure, the initiation of regular efforts to maintain brand prominence and the provision of important information to consumers across the Province. LimDev s mandate to bolster SMME and general commercial activity within the Limpopo Province is the guiding framework for the marketing and communication of its products and services. The period under review thus saw a continuation of the Enterprise s existing marketing and communications activities, with a focus on ensuring the effective, integrated use of available resources and budgets. Advertising During the period under review, LimDev sought to promote its products and services via the use of selected magazine and newspaper advertising. The Enterprise took up options to advertise in four selected magazines and four newspapers during the period, reaching an estimated readers through these channels. LimDev also partnered with related government departments to stage the Mapungubwe Festival. The event attracted many local and international music fans, and LimDev s branded presence allowed it to interact with clients and carry out general marketing and publicity. Shows and Exhibitions LimDev seeks to strategically build its image and profile on an ongoing basis, especially where opportunities arise within the networking activities of South Africa s business community. During the year under review LimDev attended and exhibited in 27 high profile exhibitions within and outside the Limpopo Province. The Enterprise enjoyed high levels of visibility at all these events, with its branding and product promotion efforts reaching an estimated people and reinforcing the LimDev brand identity in key areas of local economic activity. Publications The Enterprise published three issues of LimDev Focus during the period, reaching potential clients in the process. LimDev Focus describes the successes and challenges of the Enterprise s client base, and the stories contained in the publication are vital to creating a deeper understanding of the Enterprise s mandate and its wider activities within the Province. During the period under review, LimDev also distributed brochures detailing its core businesses and indicating what the Enterprise can offer prospective clients. CORPORATE SOCIAL INVESTMENT (CSI) LimDev s Corporate Social Investment (CSI) programmes have been strategically positioned to enhance the Enterprise s empowerment initiatives. Our social responsibility programme extends beyond support for worthy causes and seeks to add significant value to Limpopo communities, whilst also enhancing the Enterprise s position as a responsible South African citizen. Partnerships have become an important point of departure in community development and addressing socio-economic issues in Limpopo, and LimDev has thus partnered with various other institutions in support of the socio-economic development of the Province. During the year under review, LimDev spent the regulated amount - proportional to its turnover - on CSI initiatives, including the cost of administering these programmes. 28

29 Limpopo Economic Development Enterprise and its Subsidiaries and Associates FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH

30 Limpopo Economic Development Enterprise and its Subsidiaries and Associates General Information Country of Incorporation and Domicile: Nature of Business and Principal Activities: Directors: Registered Office: Postal Address: Bankers: Auditors: Secretary: South Africa Financing and Development of Small and Medium Enterprises, Public Transport, Rental of Properties, Mining and Exploration in Limpopo PJ Malabela (Chairperson) N H Mkhumane (Deputy Chairperson) C S Mathabatha (Managing Director) M H Lekota D Kourtoumbellides S V Chepape D L Mabilu Resigned 31/08/2009 H K Makgae M P Maleta M Maphutha L Masia M E Molokomme H A Ngobeni L J Sennelo Enterprise Development House Main Road, Lebowakgomo, 0737 Enterprise Development House P O Box 760, Lebowakgomo, 0737 ABSA KPMG Inc. Chartered Accountants (S.A.) Registered Auditors Bubesi Registrars (Pty) Ltd Index The reports and statements set out below comprise the Group annual financial statements presented to the shareholder: Independent Auditor s Report Report of the Board Audit Committee Accounting Authority s Responsibility Report of Accounting Authority Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Accounting Policies Notes to the Group Financial Statements Page Annexure A Annexure B Annexure C Annexure D Annexure E Annexure F Page

31 Limpopo Economic Development Enterprise and its Subsidiaries and Associates INDEPENDENT AUDITOR S REPORT KPMG Inc 5 Dimitri Crescent, Platinum Park, Bendor 0699 PO Box 11576, Bendor, 0713, South Africa Telephone +27 (15) Fax +27 (15) Docex 3 Polokwane Internet To the Shareholder REPORT ON THE FINANCIAL STATEMENTS We have audited the group financial statements and financial statements of the Limpopo Economic Development Enterprise which comprise the report of the accounting authority, the consolidated and separate statements of financial position at 31 March 2010, the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements which contain a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 84. Accounting Authority s Responsibility for the Financial Statements The accounting authority, which constitute the Board of Directors for the Limpopo Economic Development Enterprise, are responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Public Finance Management Act of South Africa and the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of the Limpopo Economic Development Enterprise at 31 March 2010 and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Public Finance Management Act of South Africa and the Companies Act of South Africa. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In terms of the Public Audit Act of South Africa and General Notice 1570 of 2009, issued in Government Gazette No of 27 November 2009, we include below our findings on the report on performance against predetermined objectives, compliance with laws and regulations and internal control. Report on Performance against Predetermined Objectives We are required by the Auditor General to undertake a limited assurance engagement on the Performance information against predetermined objectives in which the actual performance of the group for the year ended 31 March 2010 is compared with target key performance indicators (predetermined objectives), as set out on pages 19 to 24 of the report, and report thereon to those charged with governance. In this Report we are required to report our findings from our engagement relating to non-compliance with regulatory requirements, where the reported information was inadequately presented or not received timeously, and where we have evaluated reported information to be not useful or reliable. Except for the subsidiaries below where no performance against predetermined objectives exists, we have no significant findings applicable to the group report. Subsidiaries where no report on performance against predetermined objectives is prepared: Sefateng Chrome Mine (Pty) Ltd, Khumong Chrome Mine (Pty) Ltd, Fumani Green Stone (Pty) Ltd, Tshepong Chrome Mine (Pty) Ltd. 31

32 INDEPENDENT AUDITOR S REPORT Limpopo Economic Development Enterprise and its Subsidiaries and Associates Compliance with Laws and Regulations Our audit of the financial statements, described in our Report on the Financial Statements, did reveal material non-compliance with laws and regulations relating to financial matters, financial management and related matters, as required by the Public Finance Management Act of South Africa (which includes the relevant National Treasury Regulations) and the Companies Act of South Africa: The following material non-compliance was identified: The Enterprise (Limpopo Economic Development Enterprise) has not implemented effective internal control measures to collect its outstanding debts, as required by Treasury Regulation (a),(e), as 73% of the total loan book and 80% of the total rental debtors were provided as doubtful debts. Cash management performance of the Enterprise (Limpopo Economic Development Enterprise) is not reported on a monthly basis as required by Treasury Regulation (f),(g),(h), (k),(l),(m). No terms of reference of the Audit Committee, as required by Treasury Regulation 27.1, could be obtained for subsidiaries; Sefateng Chrome Mine (Pty) Ltd, Khumong Chrome Mine (Pty) Ltd, Fumani Green Stone (Pty) Ltd, Tshepong Chrome Mine (Pty) Ltd Internal Control We considered internal control relevant to our audit of the financial statements, but not for the purpose of expressing an opinion on the effectiveness of internal control. The matters reported in this Report are limited to the deficiencies identified during our audit that have resulted in a modified opinion on the financial statements. Our opinion on the financial statements, as expressed in our Report on the Financial Statements, is unmodified. Accordingly there are no matters to report in this Report. KPMG Inc. Per MF Tleane Chartered Accountant (SA) Registered Auditor Director 2 September 2010 KPMG is a company incorporated under the South African Companies Act and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative [ KPMG International ], a Swiss entity. KPMG Inc is a Registered Auditor, in public practice, in terms of the Auditing Profession Act, 26 of Registration number 1999/021543/21 Policy Board: Chief Executive: Executive Directors: Other Directors: RM Kgosana TH Bashall*, DC Duffield, A Hari, TH Toole, FB Leith, JS McIntosh, AM Mokgabudi, D van Heerden LP Fourie, T Fubu, A Jaffer, E Magondo, CM Read, Y Suleman, (Chairman of the Board), A Thunström, JM Vice The Company s principal place of business is at KPMG Crescent, 85 Empire Road, Parktown, where a list of the director s names is available for inspection * British Citizen 32

33 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Report of BOARD AUDIT COMMITTEE REPORT OF THE BOARD AUDIT COMMITTEE IN TERMS OF TREASURY REGULATION AND (b) AND (c) OF THE PUBLIC FINANCE MANAGEMENT ACT, ACT NUMBER 1 OF 1999 ( THE PFMA ) In meeting its responsibilities and in executing its duties, the Board Audit Committee is required to consider the adequacy and effectiveness of the Enterprise s internal controls and the quality of its financial information. The committee has adopted formal terms of reference and satisfied its responsibilities, during the year under review, in compliance with its terms of reference. In order to discharge its responsibilities, the Committee has reviewed, on a regular basis during the year under review, the following: The risk areas of the Enterprise s operations to be covered in the scope of internal audits Activities of the internal audit function to determine the effectiveness thereof Internal audit reports, including the response of management to issues raised therein The external audit scope to ensure that the critical areas of the business are being addressed The external auditors report and management letter The operational effectiveness of the Enterprise s policies, systems and procedures The effectiveness of the system for monitoring compliance with laws and regulations The annual financial statements Based on the outcome of such reviews and information provided by Management, we are of the view that the internal controls of the Enterprise operated fairly effectively throughout the year under review. Following our review of the annual financial statements for the year ended 31 March 2010, we are in agreement with the External Auditor s unqualified opinion expressed thereon. On behalf of the Board Audit Committee Ms L J Sennelo Chairperson 33

34 Accounting Authority S Responsibility Limpopo Economic Development Enterprise and its Subsidiaries and Associates The accounting authority is responsible for the preparation and fair presentation of the consolidated financial statements and separate financial statements, comprising the Statement of Financial Position at 31 March 2010, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the report of the accounting authority, in accordance with South African Statements of Generally Accepted Accounting Practice (GAAP), including any interpretations of such statements issued by the Accounting Practices Board and in the manner required by the Public Finance Management Act, 1999 (Act No.1 of 1999) as amended and the Companies Act of South Africa. The accounting authority s responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The accounting authority s responsibility also includes maintaining adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedules included in these financial statements. The accounting authority has made an assessment of the Enterprise s ability to continue as a going concern and has no reason to believe the business will not be a going concern in the year ahead. The auditors are responsible for reporting on whether the consolidated financial statements and separate financial statements are fairly presented in accordance with the applicable financial reporting framework. The consolidated financial statements and separate financial statements set out on pages 36 to 84 were approved by the accounting authority on 30 July 2010 and were signed on their behalf by: PJ Malabela Chairperson C S Mathabatha Managing Director 34

35 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Report of Accounting Authority 1. Review of activities Main business and operations The Group is engaged in the financing and developing of Small and Medium Enterprises and operates principally in South Africa. Subsidiaries are involved in public transport, rental of properties, as well as mining and exploration in the Limpopo Province. The operating results and state of affairs of the Enterprise are fully set out in the attached consolidated Group financial statements. A high provision is made on loan debtors and rental debtors per note 11 of the financial statements. 6. Secretary The secretary of the company is Bubesi Registrars (Pty) Ltd. 7. Holding company The Enterprise s parent entity is the Limpopo Department of Economic Development and Tourism. 8. Interest in subsidiaries Details of the Enterprise s investment in subsidiaries are set out in note 6. An amalgamation of LimDev, LIBSA and TIL has been proposed at a future commencement date of 1 April Post balance sheet events The Managing Director s contract expired on 31 July 2010 (after year end) and was not renewed. In terms of the contract, there is a 6 month notice period that should have been given to the Managing Director by LimDev. This notice was not given to the Managing Director and at year end the possible financial implications to LimDev are unknown. A strike occurred after financial year end at the subsidiary Great North Transport (Pty) Ltd, that affected the business operations. 3. Authorised and issued share capital There were no changes in the authorised or issued share capital of the Group during the year under review. 4. Dividends No dividends were declared or paid to shareholders during the year. 5. Directors The members of the accounting authority during the financial year and to the date of this report are as follows: PJ Malabela (Chairperson) N H Mkhumane (Deputy Chairperson) C S Mathabatha (Managing Director) M H Lekota D Kourtoumbellides S V Chepape D L Mabilu Resigned 31/08/2009 H K Makgae M P Maleta M Maphutha L Masia M E Molokomme H A Ngobeni L J Sennelo 35

36 STATEMENT OF FINANCIAL POSITION Limpopo Economic Development Enterprise and its Subsidiaries and Associates As at 31 March 2010 Group Enterprise Figures in Rand Note(s) Assets Non-Current Assets Investment Property Property, Plant & Equipment Intangible Assets Investments in Subsidiaries Investments in Joint Ventures Investments in Associates Loans to Group Companies Other Financial Assets Deferred Tax Long Term Pre-Paid Expenses Current Assets Inventories Other Financial Assets Trade & Other Receivables Pre-Paid Expenses Properties Held-for-Sale Cash & Cash Equivalents Non-Current Assets Held-for-Sale Total Assets Equity & Liabilities Equity Equity Attributable to Equity Holders of Parent Share Capital Reserves Retained Earnings ( ) ( ) Non-Controlling Interest ( ) ( ) Liabilities Non-Current Liabilities Loans from Group Companies Loan from Related Parties Other Financial Liabilities Finance Lease Obligation Retirement Benefit Obligation Provisions Current Liabilities Loans from Group Companies Other Financial Liabilities Current Tax Payable Finance Lease Obligation Trade & Other Payables Provisions Bank Overdraft Total Liabilities Total Equity & Liabilities

37 Limpopo Economic Development Enterprise and its Subsidiaries and Associates STATEMENT OF COMPREHENSIVE INCOME As at 31 March 2010 Group Enterprise Figures in Rand Note(s) Revenue Other Income Operating Expenses ( ) ( ) ( ) ( ) Government Grants Received Operating Profit (Loss) ( ) ( ) Investment Revenue Income from Equity Accounted Investments Finance Costs 28 ( ) ( ) ( ) ( ) Profit (Loss) before Taxation Taxation Profit (Loss) for the Period Other Comprehensive Income: Available-for-Sale Financial Assets Adjustments Total Comprehensive Income (Loss) Total Comprehensive Income (Loss) Attributable to: Owners of the Parent Non-Controlling Interest ( ) ( )

38 Statement of changes in equity Limpopo Economic Development Enterprise and its Subsidiaries and Associates Figures in Rand Contributions from Owners Fair Value Adjustment Assets Available- For-Sale Reserve Non-Distributable Reserve Total Reserves Accumulated Profit / (Loss) Total Attributable to Equity Holders of the Group/ Company Non-Controlling Interest Total Equity Opening Balance as Previously Reported ( ) Adjustments Prior Period Error Balance at 01 April 2008 as restated ( ) Changes In Equity Total Comprehensive Income for the Year ( ) Total Changes ( ) Balance at 01 April ( ) Changes in equity Total Comprehensive Income for the Year ( ) Total Changes ( ) Balance at 31 March ( ) Notes(s) 20 38

39 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Statement of changes in equity (CONTINUED) Figures in Rand Share Capital Fair Value Adjustment Assets Available-For-Sale Reserve Non-Distributable Reserve Total Reserves Retained Earnings Total Attributable to Equity Holders of The Group/ Enterprise Total Equity Opening Balance as Previously Reported ( ) Adjustments Prior Period Error Balance at 01 April 2008 as restated ( ) Changes in Equity Profit for the Period Investment Property Adjustment Total Changes Balance at 01 April ( ) Changes in Equity Total Comprehensive Income for the Year Total changes Balance at 31 March ( ) Notes(s) 20 39

40 Statement of Cash Flows Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Enterprise Figures in Rand Note(s) Cash Flows from Operating Activities Profit/Loss before Taxation Adjusted for: Depreciation & Amortisation Profit on Sale of Assets ( ) ( ) ( ) ( ) Income from Equity Accounted Investments ( ) ( ) - - Dividends Received ( ) ( ) ( ) ( ) Interest Received ( ) ( ) ( ) ( ) Finance Costs Available for Sale Adjustment Movements in Rehab Liability (Provision) Movement in Retirement Benefit Liability Impairment Loss Changes in Working Capital ( ) ( ) Inventories ( ) (87 949) Properties Held for Sale ( ) - - Trade & Other Receivables ( ) ( ) Pre-Paid Expenses ( ) - - Trade & Other Payables ( ) ( ) Total Cash Used in Operations ( ) Finance Income Dividends Received Finance Costs ( ) ( ) ( ) ( ) Reversal of Income Tax Net Cash from Operating Activities: ( ) Cash Flow from Investing Activities Purchase of Property, Plant & Equipment 4 ( ) ( ) ( ) ( ) Sale Of Property, Plant & Equipment Purchases of Investment Property 3 - ( ) - ( ) Sale of Investment Property Purchase of Intangible Assets 5 ( ) ( ) - ( ) Movement in Investments in Associates ( ) ( ) - - Movements in Loans to Group Companies ( ) ( ) ( ) Movements in Loans from Group Companies Movement in Financial Assets ( ) ( ) Other Movements in Intangible Assets Cash Flow from Financing Activities ( ) ( ) ( ) Repayment of Other Financial Liabilities ( ) ( ) ( ) ( ) Repayments in Loans Finance Leases ( ) ( ) - - ( ) ( ) ( ) ( ) Total Cash Movement for the Period ( ) ( ) Total Cash at Beginning of the Period ( ) Cash & Cash Equivalents at 31 March ( ) ( ) 40

41 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Accounting Policies 1. Reporting entity LimDev is a juristic entity established in terms of the Northern Transvaal Development Corporation 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, Act No.1 of 1999 (as amended by Act No. 29 of 1999). LimDev is not incorporated as a company but is required by the Northern Transvaal Development Corporation Act No. 5 of 1994, to comply with the Companies Act, 1973 (Act No. 16 of 1973). LimDev s mandate is to provide development finance to Small and Medium Enterprises (SME s) to stimulate the growth of the Limpopo economy. The registered address of the Enterprise is: Enterprise Development House, Main Road, Lebowakgomo, South Africa. The consolidated financial statements of the Enterprise for the year ended 31 March 2010 comprises the Enterprise, its subsidiaries and the Group s interest in associates (together referred to as the Group). These accounting policies are consistent with the previous period. 1.1 Basis of preparation Statement of compliance The consolidated financial statements and separate financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice, and the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended. Basis of measurement These consolidated financial statements and separate financial statements have been prepared on the historical cost basis, except for financial instruments classified as available-for-sale that are measured at fair value. Use of estimates and judgements The preparation of the consolidated financial statements and separate financial statements are in conformity with South African Statements of Generally Accepted Accounting Practice and requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements, are described in the notes set out below in the following section. Functional and presentation currency These consolidated financial statements are presented in South African Rand, which is the Enterprise s functional currency. All financial information presented in Rand has been rounded to the nearest Rand. 1.2 Investment property Investment properties are held to earn rental income or for capital appreciation, or for both, but not for resale in the ordinary course of business. Owner-occupied properties are held for production and administrative purposes. This distinguishes owner-occupied properties from investment properties. On disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement., The Group adopted the cost model in accounting for these properties. In terms of the cost model, investment properties are disclosed at cost less accumulated depreciation and accumulated impairment losses. Cost model Investment property is carried at cost less accumulated depreciation and any accumulated impairment losses. The residual value, depreciation method and the useful life of the assets are reviewed on an annual basis. Depreciation is provided to write down the cost, to estimated residual value on a straight line basis over the useful life of the property, as follows: Estimated Useful Lives Item Property - buildings 50 years 50 years 1.3 Property, plant and equipment The cost of an item of property, plant and equipment is recognised as an asset when: it is probable that future economic benefits associated with the item will flow to the Group; and the cost of the item can be measured reliably. Property, plant and equipment is initially measured at cost. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value. Impairment losses and any reversal of impairment losses are recognised in profit or loss. The useful lives of items of property, plant and equipment have been assessed as follows: Estimated Useful Lives Item Land Not depreciated Not depreciated Buildings 50 years 50 years Computer Equipment 3 years 3 years Plant, Machinery & Equipment 10 years 10 years Furniture & Fixtures 3-10 years 3-10 years Motor Vehicles 4-10 years 4-10 years Office Equipment 3-10 years 3-10 years Sundry Equipment 3-10 years 3-10 years Land is not depreciated as it is deemed to have an indefinite life. 41

42 Accounting Policies Limpopo Economic Development Enterprise and its Subsidiaries and Associates The residual value, depreciation method and the useful lives of each asset are reviewed on an annual basis. The depreciation charge for each period is recognised in profit or loss. The profit 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 profit 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. 1.4 Intangible Assets An intangible asset is recognised when: it is probable that the expected future economic benefits that are attributable to the asset will flow to the Entity; and the cost of the asset can be measured reliably. Intangible assets are initially recognised at cost. 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 the 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 impaired, the amount of impairment is expensed in the year of determination. Sales of proved and unproved 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. Site restoration and dismantling costs In accordance with the Group s environmental policy and applicable legal requirements, a provision for site restoration in respect of contaminated land, and the related expense, is recognised when the land is contaminated. 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. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Estimated Useful Lives Item Right to water use 25 years 25 years 1.5 BASIS OF CONSOLIDATION Investments in subsidiaries Consolidated Financial Statements Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and the operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The financial statements of the subsidiaries are included in the consolidated financial statements from the date control commenced until the date that control ceases. All significant inter-group transactions and balances are eliminated on consolidation. Where necessary, the accounting policies of subsidiaries have been changed to align them with the policies adopted by the Group. The Enterprise s Financial Statements In the Enterprise s separate annual financial statements,, investments in subsidiaries are carried at cost less any accumulated impairment. Income is only recognised to the extent that the Enterprise receives distributions from the accumulated net profit arising subsequent to the date of acquisition. Investment in joint ventures Consolidated Financial Statements A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. An investment in a joint venture is carried at cost less any accumulated impairment. Profits are only recognised to the extent that the Group receives distribution from the accumulated net surpluses arising subsequently to the date of acquisition. The Enterprise s Financial Statements In the Enterprise s separate annual financial statements, investments in joint ventures are carried at cost less any accumulated impairment. Profits are only recognised to the extent that the company receives distributions from the accumulated net surpluses arising subsequent to the date of acquisition. Investments in associates Consolidated Financial Statements An associate is an enterprise over whose financial and operating policies the Group has the ability to exercise significant influence and which is neither a subsidiary nor a joint venture of the Group. Significant influence is presumed to exist when the Group holds between 20 to 50 percent of the voting power of another entity. Associated companies are accounted for on the equity method and are recognised initially at cost. The Group s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group s share of income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including long-term investments) is reduced to nil and the recognition of future losses is discontinued except to the extent that the Group has an obligation or has made payment on behalf of the investee. Accumulated profit or loss and movements on reserves are generally determined from the most recent audited annual financial statements of the associates and from unaudited information to the latest date available. Enterprise S Financial StatementS An investment in an associate is carried at cost less any accumulated impairment. Income is only recognised to the extent that the Enterprise receives distributions from the accumulated net profit arising subsequent to the date of acquisition. 42

43 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Accounting Policies 1.6 Financial instruments Financial Assets The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Management determines the classification of its financial assets at initial recognition. Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held-fortrading and those designated a fair value through profit or loss at inception. 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. The Group designates financial assets at fair value through profit or loss when either: the assets are managed, evaluated and reported internally on a fair value basis; the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; or the asset contains an embedded derivative that significantly modifies the cash flows that would otherwise be required under the contract. Financial assets at fair value through profit or loss are measured at fair value, and any changes therein are recognised in profit or loss. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables are comprised of trade and other receivables. Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held on call with banks, and investments in money market instruments and bank overdrafts, all of which are available for use by the Group unless otherwise stated. Cash and cash equivalents are carried at fair value in the balance sheet. Held-to-maturity financial assets If the Group has the positive intent and ability to hold financial assets to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Any sale or reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity would result in the reclassification of all held-tomaturity investments as available-for-sale, and prevent the Group from classifying investment securities as held-to-maturity for the current and the following two financial years. Available-for-sale financial assets Available-for-sale investments are non-derivative investments 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. Recognition and measurement Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available-for-sale are recognised on trade date - the date on which the Group commits to purchase or sell the asset. Loans are recognised when the cash is advanced to the borrowers. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets (or, where applicable, a part of a financial asset or part of a group of similar financial assets) are derecognised when the contractual rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership, without retaining control. Any interest in the transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. The fair values of quoted investments in active markets are based on current bid prices. If the market for 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, discounted cash flow analyses, option pricing models and other valuation techniques commonly used by market participants. Any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at its cost, including transaction cost, less impairment. Financial liabilities Financial liabilities are recognised initially at fair value, generally being their issue proceeds net of transaction cost incurred. Financial liabilities are subsequently stated at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Offsetting financial instruments Financial assets and liabilities are offset and the amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liablility simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards, or for the gains and losses arising from the Group of similar transactions such as in the Group s trading activity. 43

44 Accounting Policies Limpopo Economic Development Enterprise and its Subsidiaries and Associates Impairment of financial assets The Group assesses whether there is objective evidence that the financial asset or group of financial assets not carried at fair value through profit or loss is impaired at each balance sheet date. A financial asset or group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Impairment losses are recognised in the income statement and reflected in an allowance account against loans and receivables. Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the Group about the following loss events: Significant financial difficulty of the issuer or obligor A breach of contract, such as default or delinquency in interest or principal payments The Group granting to the borrower, for economic or legal reason relating to the borrower s financial difficulty, a concession that the lender would not otherwise consider It becoming probable that the borrower will enter bankruptcy or other financial reorganisation The disappearance of an active market for that financial asset resulting in financial difficulties Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decreases cannot yet be identified with the individual financial asset in the Group The Group first assesses whether objective evidence of impairment exists individually for the financial assets that are individually significant, referred to as specific impairments, and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group (portfolio) of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. The amount of specific impairments raised is the amount needed to reduce the carrying value of the asset to the expected ultimate fair value less costs to sell, taking into consideration the financial status of the underlying client and any security in place for the recoverablility of the financial asset. The recoverable amount of the assets is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of the asset). For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similiar credit risk characteristics (i.e. on the basis of the Group s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Group, and the historical loss experience for assets with credit risk characteristics similar to those in the Group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions which did not affect the period on which the historical loss experience is based. This also serves to remove the effects of conditions in the historical period that do not exist currently. Estimates of changes in future cash flows for groups of assets should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in interest rates, foreign currency exchange rates, payment status, or other factors indicative of changes in the probability of losses in the Group and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience. If an impairment loss decreases due to an event occurring subsequently and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), then the previously recognised impairment losses are reversed through the statement of comprehensive income with a corresponding increase in the carrying amount of the underlying asset. The reversal is limited to an amount that does not state the asset at more than what its amortised cost would have been in the absence of impairment. Impairment of available-for-sale financial assets The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as availablefor-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss) is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income. Any increase in the fair value of an equity instrument after an impairment loss has been recognised, is treated as a revaluation and is recognised directly in equity. If in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the income statement. Impairment of non-financial assets The carrying amounts of the Group s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Cash-generating units A cash-generating unit is the smallest identifiable user group that generates cash flows that are largely independent from other assets and groups. For an asset whose cash flows are largely dependent on those of other assets, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. The recoverable amount 44

45 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Accounting Policies of a cash-generating unit is the greater of its value in use and its fair value, less costs to sell. Other non-financial assets The recoverable amount of other non-financial assets is the greater of fair value less cost to sell and its value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in the prior periods are assessed at each reporting date for any indicators that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 1.7 Taxation Income tax Income tax on profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Additional income tax that arises from the distribution of dividends is recognised at the same time as the liability to pay the related dividend. The charge for current tax is based on the results for the period as adjusted for items which are not taxable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. Current tax also includes any adjustment to tax payable in respect of previous years. Deferred tax Deferred income tax and deferred capital gains tax are accounted for on the comprehensive basis, using the liablity method for all temporary differences arising between the net book value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income. In principle, deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which unused tax deductions can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax will be realised. Deferred tax is not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable income nor accounting income. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also recognised in equity. 1.8 Leases Leases of property, plant and equipment where the Enterprise assumes substantially all the benefits and risks of ownership, are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability measured at an amount equal to the lower of its fair value and the presented value of minimum lease payments and the finance charges. The corresponding rental obligation, net of finance charges, are included in other long-term payables. The interest element of the finance charge is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts are depreciated over the useful life of the assets. Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. 1.9 Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on the following basis: Houses and stands are valued at direct cost and attributable overheads Finished goods, production supplies, consumables and vehicles are valued at cost on a first-in, first-out basis 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. Net realisable value is the estimated selling price in the ordinary cause of business, less the estimated cost of completion and selling expenses Share capital and equity Ordinary shares Ordinary shares are classified as equity. Incremental cost directly attributable to the issue of ordinary shares is recognised as a deduction from equity, net of any tax effects Contingent liabilities and commitments Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities are not recognised in the statement of financial position of the Group but disclosed in notes to the financial statements. Commitments Items are classified as commitments where the Group has commited itself to future transactions 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. A liability is recognised for the amount expected to be paid under short-term cash bonus if there is a present legal or constructive 45

46 Accounting Policies Limpopo Economic Development Enterprise and its Subsidiaries and Associates obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service, are discounted to their present value. Defined benefit plans For defined benefit plans the cost of providing the benefits is determined using the projected credit method. Actuarial valuations are conducted by independent actuaries separately for each plan. A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. The Group recognises all actuarial gains and losses arising from defined benefit plans in profit or loss. Actuarial gains and losses are recognised in the period in which they arise Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, from which it is probable that an outflow of economic benefits will be required to settle the obligation and the obligation can be estimated reliably. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of time value of money and, where appropriate, the risk specific to the liability Government Grants Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate. Unconditional government grants are recognised in profit or loss when the grants becomes receivable. Grants related to income are presented as a credit in the statement of comprehensive income Revenue Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discount and volume rebates. 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 balance sheet date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Group; the stage of completion of the transaction at the balance sheet date 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 is recognised only to the extent of the expenses recognised that are recoverable. Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting date. Interest is recognised on a time proportion basis which takes into account the effective yield on the asset over the period it is expected to be held. 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 Finance cost Finance cost comprises expenses on borrowings. Finance cost is recognised in profit or loss using the effective interest method. Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments. 46

47 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 2. New standards and interpretations 2.1 Standards and Interpretations early adopted The Group has chosen to early adopt the following standards and interpretations: IAS 27 (AC 132) amendments IAS 27 (AC 132) has been early adopted as this only needs to be adopted for the first time for the financial reporting period ending 31 March In accordance with IAS 27 (AC 132) amendments, acquisitions of additional non-controlling equity interests in subsidiaries have to be accounted for as equity transactions. Disposals of equity interests while retaining control are also accounted for as equity transactions. When control of an investee is lost, the resulting gain or loss relating to the transaction will be recognised in profit or loss. The amendments to IAS 27 (AC 132) also require that losses (including negative other comprehensive income as detailed in the revised IAS 1 (AC 101)) have to be allocated to the non-controlling interest even if doing so causes the non-controlling interest to be in a deficit position. The Group will in future change its accounting polices on the allocation of losses to non-controlling interests. In the past, losses were allocated only until the non-controlling interests had a zero balance. 2.2 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 2010 or later periods: IAS 24 (AC 126) (revised) IAS 24 (AC 126) (revised) will be adopted for the first time for the Group s financial reporting period ending 31 March The standard will be applied retrospectively. IAS 24 (AC 126) (revised) addresses the disclosure requirements in respect of related parties, with the main changes relating to the definition of a related party and disclosure requirements by governmentrelated entities. The change in the definition of a related party has resulted in a number of new related party relationships being identified. The amendment is not expected to have a material impact on the Group s financial statements. Improvements to IFRS 2009 Amendments to IAS 38 Intangible Assets The amendments will be adopted for the first time for its financial reporting period ending 30 June The amendments clarify that an intangible asset that is separable only together with a related contract, identifiable asset or liability is recognised separately from goodwill together with the related item; and complementary intangible assets with similar useful lives may be recognised as a single asset. The amendments also describe valuation techniques commonly used by entities when measuring the fair value of intangible assets acquired in a business combination for which no active market exists. The amendments are not expected to have a material impact on the Group s financial statements. Amendments to IAS 7 Statement of Cash Flows The amendments will be adopted for the first time for its financial reporting period ending 30 January The amendments clarify that only expenditures that result in the recognition of an asset can be classified as a cash flow from investing activities. The amendments are not expected to have a material impact on the Group s financial statements. IAS 27 Consolidated and Separate Financial Statements (amended 2008). The amendments will be adopted for the first time for its financial reporting period ending 30 June The IASB amended IAS 27 to reflect changes to the accounting for noncontrolling (previously minority) interest. The amendments deal primarily with the accounting for changes in ownership interests in subsidiaries after control is obtained, the accounting for the loss of control of subsidiaries, and the allocation of profit or loss to controlling and noncontrolling interests in a subsidiary. Significant changes include: changes in a parent s ownership interest in a subsidiary after control is obtained that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). Accordingly, acquisitions of additional non-controlling interests are accounted for as equity transactions and disposals of equity interests while retaining control are accounted for as equity transactions; transactions resulting in a loss of control would cause a gain or loss to be recognised in profit or loss; and losses applicable to the non-controlling interests, including negative other comprehensive income, are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a negative balance. The amendments are not expected to have a material impact on the Group s and entity s financial statements. Amendments to IAS 17 Leases The amendments will be adopted for the first time for its financial reporting period ending 30 June The IASB deleted guidance stating that a lease of land with an indefinite economic life is normally is classified as an operating lease, unless at the end of the lease term title is expected to pass to the lessee. The amendments clarify that when a lease includes both the land and building elements, an entity should determine the classification of each element based on paragraphs 7 13 of IAS 17, taking into account the fact that land normally has an indefinite economic life. The amendments are not expected to have a material impact on the Group s and entity s financial statements. Improvements to IFRS 2010 IFRS 7 Financial Instruments: Disclosures Amendments to disclosures The amendments will be adopted for the first time for its financial reporting period ending 31 December IFRS 7 is amended to add an explicit statement that the qualitative disclosure should be made in the context of the quantitative disclosures to better enable users to evaluate an entity s exposure to risks arising from financial instruments. The existing disclosure requirements of IFRS 7 are amended as follows: IFRS 7 is amended to state that clarification that disclosure of the amount that best represents an entity s maximum exposure to credit risk is required only if the carrying amount of a financial asset does not reflect such exposure already; additional requirements to disclose the financial effect of collateral held as security and other credit enhancements in respect of a financial instrument. An example of such disclosure is quantification of the extent to which credit risk is mitigated by the collateral and other credit enhancement obtained. This disclosure is in addition to the existing requirement to describe the existence and nature of such collateral; and 47

48 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS IFRS 7 is amended to state that clarification that disclosure in respect of collateral taken possession of by the Entity is required only in respect of such collateral held at the end of the reporting period. The following requirements have been removed from IFRS 7: disclosure of the carrying amount of financial assets that would have been past due or impaired if their terms had not been renegotiated; disclosure of the description and fair value of collateral held as security and other credit enhancements in respect of financial assets that are past due but not impaired and in respect of financial assets that are individually determined to be impaired; and the clause stating that quantitative disclosures are not required when a risk is not material has been removed from IFRS 7. The general materiality considerations continue to apply to all disclosures required by IFRS 7 in the same way as they apply to other IFRSs. The amendments are not expected to have a material impact on the Group s financial statements. IAS 1 Presentation of Financial Statements Presentation of statement of changes in equity The amendments will be adopted for the first time for its financial reporting period ending 31 December IAS 1 requires for each component of equity a reconciliation from opening to closing balances to be presented in the statement of changes in equity. That reconciliation is required to show separately, changes arising from items recognised in profit or loss, in other comprehensive income and from transactions with owners acting in their capacity as owners. IAS 1 is amended to clarify that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income also is required to be presented, but is permitted to be presented either in the statement of changes in equity or in the notes. The amendments are not expected to have a material impact on the Group s financial statements. IFRS 3 (AC 140) The revised IFRS 3 (AC 140) will be adopted for the first time for its financial reporting period ending 31 March IFRS 3 (AC 140) applies to all new business combinations that occur after 1 July For these business combinations after 1 July 2009, the Group will change its accounting policies to be in line with the revised IFRS 3 (AC 140). In future, all transaction costs will be expensed and contingent purchase consideration will be recognised at fair value at acquisition date. For successive share purchases, any gain or loss for the difference between the fair value and the carrying amount of the previously held equity interest in the acquiree, will be recognised in profit or loss. The amendment is not expected to have a material impact on the Group s financial statements. IFRS 9 (AC 146) IFRS 9 (AC 146) will be adopted for the first time for its financial reporting period ending 31 March The standard will be applied retrospectively, subject to transitional provisions. IFRS 9 (AC 146) addresses the initial measurement and classification of financial assets and will replace the relevant sections of IAS 39 (AC 133). Under IFRS 9 (AC 146) there are two options in respect of classification of financial assets, namely, financial assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows and when they give rise to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value. Embedded derivatives are no longer separated from hybrid contracts that have a financial asset host. IFRS 3 Business Combinations Transitional requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS The amendments will be adopted for the first time for its financial reporting period ending 30 June IFRS 3 is amended to state that contingent consideration arising in a business combination that had been accounted for in accordance with IFRS 3 (2004) that has not been settled or otherwise resolved at the adoption date of IFRS 3 (2008) continues to be accounted for in accordance with IFRS 3 (2004). For such contingent consideration, the cost of the business combination is adjusted if and when payment of the contingent consideration is probable and the amount can be measured reliably. That means that IAS 39 Financial Instruments: Recognition and Measurement, does not apply to contingent consideration within the scope of the amendment, i.e. liability classified contingent consideration is not measured at fair value through profit or loss. The amendment is required to be applied prospectively from the date that an entity first applied IFRS 3 (2008). The amendments are not expected to have a material impact on the Group s and entity s financial statements. IFRS 3 Measurement of non-controlling interests The amendments will be adopted for the fist time for its financial reporting period ending 30 June IFRS 3 is amended to limit the accounting policy choice to measure non-controlling interests (NCI) upon initial recognition either at fair value, or at the NCI s proportionate share of the acquiree s identifiable net assets, to instruments that give rise to a present ownership interest and currently entitle the holder to a share of net assets in the event of liquidation. The accounting policy choice does not apply to other instruments, such as written options classified as equity instruments or options granted under share-based payment arrangements. Such interests will generally be measured at fair value or otherwise in accordance with other relevant IFRSs, e.g. share-based payments that give rise to NCI will be measured in accordance with IFRS 2 Share-based Payment. The amendment is required to be applied prospectively from the date that an entity first applied IFRS 3 (2008). The amendments are not expected to have a material impact on the Group s and entity s financial statements. IAS 27 Consolidated and Separate Financial Statements Transition requirements for amendments made as a result of IAS 27 (2008) to IAS 21, IAS 28 and IAS 31 The amendments will be adopted for the first time for its financial reporting period ending 30 June IAS 27 (2008) resulted in a number of consequential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures, which added guidance about disposals of all or part of a foreign operation and about accounting for a loss of significant influence or joint control respectively. However, it was not specified whether those amendments were to be applied retrospectively or prospectively. The 2010 improvements clarify that the consequential amendments should be applied prospectively, except for the amendments to IAS 28 and IAS 31 that solely are the result of renumbering in IAS 27 (2008). 48

49 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 3. INVESTMENT PROPERTY Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Depreciation Value Valuation Depreciation Value Investment Property ( ) ( ) Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Depreciation Value Valuation Depreciation Value Investment Property ( ) ( ) RECONCILIATION OF INVESTMENT PROPERTY Figures in Rand 2010 Opening Depreciation Total Balance Investment Property ( ) Figures in Rand 2009 Figures in Rand 2010 Figures in Rand 2009 Opening Additions Disposals Depreciation Total Balance Investment Property ( ) ( ) Opening Depreciation Total Balance Investment Property ( ) Opening Additions Disposals Depreciation Total Balance Investment Property ( ) ( ) Figures in Rand Fair Value for Investment Property Investment property comprises a number of commercial properties that are leased to third parties. No contingent rents are charged. The majority of the buildings reflected above were erected on properties for which Permission to Occupy has been granted. Deeds of Transfers and Occupation Right Permits in respect of certain properties have not yet been issued and others are in the process of being registered in the name of the Enterprise and in the name of the subsidiary companies. A register of particulars of the investment properties is available for inspection at the registered office of the Enterprise. 49

50 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 3. INVESTMENT PROPERTY (CONTINUED) Valuation method 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, i.e. the market between a willing landlord and tenant. The fair value of investment property is calculated based on the Group s 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 PROPERTIES Figures in Rand Rental Income Direct Operating Expenses Arising from Investment Properties Property, plant and equipment Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Depreciation Value Valuation Depreciation Value Land Buildings ( ) ( ) Plant & Machinery ( ) ( ) Furniture & Fixtures ( ) ( ) Motor Vehicles ( ) ( ) Office Equipment ( ) ( ) Computer Equipment ( ) ( ) Machinery & Equipment ( ) - Operating Equipment (8 654) Sundry Equipment ( ) ( ) Total ( ) ( ) Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Depreciation Value Valuation Depreciation Value Land Buildings ( ) ( ) Plant & Machinery ( ) ( ) Furniture & Fixtures Motor Vehicles ( ) ( ) Office Equipment ( ) ( ) Computer Equipment ( ) ( ) Sundry Equipment ( ) ( ) Total ( ) ( )

51 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 4. Property, plant and equipment (CONTINUED) RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT Figures in Rand 2010 Opening Additions Disposals Transfers Depreciation Impairment Total Balance Loss Land Buildings (22 638) ( ) ( ) Plant & Machinery (110) - (62 887) Furniture & Fixtures (4 902) 4 ( ) Motor Vehicles ( ) ( ) ( ) Office Equipment (10 053) (49 331) ( ) Computer Equipment ( ) (8 321) Operating Equipment (68 408) Sundry Equipment (23 523) ( ) Total ( ) ( ) ( ) (8 321) Figures in Rand 2009 Opening Additions Disposals Other Changes Depreciation Total Balance Movements Land Buildings ( ) Plant & Machinery ( ) Furniture & Fixtures ( ) (40 846) Motor Vehicles (16 719) - ( ) Office Equipment ( ) Computer Equipment ( ) Operating Equipment ( ) Computer Software ( ) Sundry Equipment (25 133) (7 936) Total (16 719) ( )

52 NOTES TO The Group FINANCIAL STATEMENTS Limpopo Economic Development Enterprise and its Subsidiaries and Associates 4. Property, plant and equipment (CONTINUED) RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT Figures in Rand 2010 Opening Additions Disposals Other Changes Depreciation Total Balance Movements Land Buildings ( ) Plant & Machinery Furniture & Fixtures Motor Vehicles (14 655) - ( ) Office Equipment ( ) Computer Equipment ( ) Sundry Equipment (78 688) Total (14 655) ( ) Figures in Rand 2009 Opening Additions Disposals Other Changes Depreciation Total Balance Movements Land Buildings ( ) Plant & Machinery (19 546) Furniture & Fixtures (59 138) ( ) Motor Vehicles (16 719) - ( ) Office Equipment (53 577) Computer Equipment ( ) Sundry Equipment (12 889) (74 859) Total (16 719) 385 ( )

53 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 5. INTANGIBLE ASSETS Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Amortisation Value Valuation Amortisation Value Mining Equipment - Lebalelo Water Project ( ) ( ) Exploration & Evaluation Asset Environmental Rehabilitation Asset Total ( ) ( ) Figures in Rand Cost/ Accumulated Carrying Cost/ Accumulated Carrying Valuation Amortisation Value Valuation Amortisation Value Mining Equipment - Lebalelo Water Project

54 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 5. INTANGIBLE ASSETS (CONTINUED) RECONCILIATION OF INTANGIBLE ASSETS Figures in Rand 2010 Balance at Additions Revenue Amortisation Balance at 1 April March 2010 Mining Equipment - Lebalelo Water Project (77 609) Exploration & Evaluation Asset ( ) Environmental Rehabilitation Asset Total ( ) (77 609) Figures in Rand 2009 Balance at Adjustments Amortisation Balance at 1 April March 2009 Mining Equipment - Lebalelo Water Project (77 610) Exploration & Evaluation Asset ( ) Total ( ) (77 610) Figures in Rand 2010 Balance at Balance at 1 April March 2010 Mining Equipment - Lebalelo Water Project Figures in Rand 2009 Balance at Balance at 1 April March 2009 Mining Equipment - Lebalelo Water Project Note: Included in the environmental rehabiliation asset is guarantees paid to the Department of Minerals and Energy for the rehabilitation of mines amounting to R

55 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 6. Investments in subsidiaries Name of Entity % % Carrying Carrying Holding Holding Amount Amount Figures in Rand Kulungisa (Pty) Ltd Mapulaneng Investment Enterprise (Pty) Ltd VDC Investments (Pty) Ltd Great North Transport (Pty) Ltd Risima Housing Finance Corporation (Pty) Ltd Capitol Hill (Pty) Ltd Corridor Mining Resources (Pty) Ltd Impairment of Investment in Subsidiaries (2 024) (1 924) Total The carrying amounts of Subsidiaries are shown net of impairment losses. 7. Investments in JOINT VENTUREs Corridor Mining Resources (Pty) Ltd Represented by 45% share in Rock Island (Pty) Ltd, a company whose main activities include mining and prospecting. Investments in entities where the feasibility of mining has not yet been established have been impaired. Refer to Annexure D 8. Investments in ASSOCIATES Figures in Rand Shares At Cost New Investments in Associates Attributable Share of Post-Acquisition Retained Earnings Reclassification of 30% Shareholding in ASA Metals to Assets Held-for-Sale ( ) ( ) ( ) ( ) Impairment of Investments in Associates ( ) ( ) ( ) ( ) Total The carrying amounts of Associates are shown net of impairment losses. 55

56 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 8. Investments in associates (CONTINUED) SUMMARY OF S INTEREST IN ASSOCIATES Name Assets Liabilities Revenue Profit/(Loss) % Interest Figures in Rand 2010 ASA Metals (Pty) Ltd AttaClay (Pty) Ltd Makapan Mall (Pty) Ltd Bopedi Shopping Centre (Pty) Ltd Glenrand MIB Limpopo OK Bazaars (Venda) Ltd Total Name Assets Liabilities Revenue Profit/(Loss) % Interest Figures in Rand 2009 ASA Metals (Pty) Ltd AttaClay (Pty) Ltd Makapan Mall (Pty) Ltd Bopedi Shopping Centre (Pty) Ltd Glenrand MIB Limpopo OK Bazaars (Venda) Ltd Total The following associates are dormant, fully provided for and therefore not equity accounted for in the Group. FM Holdings Furniture Management & Marketing Ltd Lebowa Advertising (Pty) Ltd Mkhuhlu Bakery (Pty) Ltd Rent-A-Sign Lebowa (Pty) Ltd The New Chuene Resort (Pty) Ltd Far North Bus Services (Pty) Ltd The following are associates of Corridor Mining Resources (Pty) Ltd, a wholly-owned subsidiary of the Enterprise, which have not been equity accounted for due to accumulated losses: Mahube Mining (Pty) Ltd - 21% of shareholding Vanadium & Magnetite Exploration & Development Co.(SA) (Pty) Ltd % of shareholding Maruleng Mining and Construction (Pty) Ltd % of shareholding Associates with Different Reporting Dates: ASA Metals (Pty) Ltd - 31 December Bopedi Shopping Centre (Pty) Ltd - 28 February Makapan Mall (Pty) Ltd - 28 February OK Bazaars (Venda) Ltd - 30 June Attaclay (Pty) Ltd - 30 June Glenrand MIB Limpopo (Pty) Ltd - 30 June Reporting dates differ as per group instruction of the majority shareholders of the associates. The approved financial statements used for consolidation purposes of OK Bazaars (Venda) Ltd, Attaclay (Pty) Ltd and Glenrand MIB Limpopo (Pty) Ltd were dated for the year ending 30 June No reliable information for the remaining 9 months to March 2010 could be obtained for inclusion in LimDev s consolidation. 56

57 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 9. Loans to/(from) group companies SUBSIDIARIES Figures in Rand Kulungisa (Pty) Ltd Mapulaneng Investment Enterprise (Pty) Ltd - - ( ) ( ) VDC Investments (Pty) Ltd - - ( ) ( ) Great North Transport (Pty) Ltd Risima Housing Finance Corporation (Pty) Ltd - - ( ) ( ) Capitol Hill (Pty) Ltd Corridor Mining Resources (Pty) Ltd Great North Transport (Pty) Ltd - - ( ) - Subtotal Impairment On Loans - - ( ) ( ) Total Limpopo Economic Development Enterprise has deferred its right to claim payment of debts owing to it by the subsidiaries until their assets, fairly valued, exceeds their liabilities. These loans are unsecured and have no fixed terms of repayment, but by intent are of a long term nature except for Great North Transport (Pty) Ltd amounting to R and Risima Housing Finance Corporation (Pty) Ltd amounting to R The loans bear no interest except for the following loans: Capitol Hill (Pty) Ltd Loan bears interest at prime plus 0.5% per annum. VDC Investment Company (Pty) Ltd Loan bears interest at prime plus 0.5% per annum. The loan is unsecured and has no fixed term of repayment. Great North Transport (Pty) Ltd Loan bears interest at prime rate per annum. The loan is unsecured and has fixed terms of repayment. ASSOCIATES Figures in Rand The New Chuene Resort (Pty) Ltd ASA Metals (Pty) Ltd FM Holdings (Pty) Ltd Makapan Mall (Pty) Ltd Bopedi Shopping Centre (Pty) Ltd Phiphidi Resort Subtotal Impairment of Loans to Associates ( ) ( ) ( ) ( ) Total Except for the following loans, the above loans are interest free and have no fixed terms of repayment. ASA Metals (Pty) Ltd Bopedi Shopping Centre (Pty) Ltd Interest is charged at 0.5% below the prime lending rate. Joint Ventures A joint venture in Corridor Mining Resources (Pty) Ltd, a fully-owned subsidiary of LimDev, is accounted for in the financial statements of Corridor Mining Resources (Pty) Ltd as follows: A share investment of 45% (2009: 45%) is invested in Rock Island 17 (Pty) Ltd with a cost of R (2009: R ). This investment has been impaired fully and the fair value of the shares in the joint venture is R0 (2009: R0). Loans receivable from Rock Island 17 (Pty) Ltd with a cost of R (2009: R ) has been fully impaired to a fair value of R0 (2009: R0 ). Represented by a 45% share in Rock Island 17 (Pty) Ltd, a company whose main activities include mining and prospecting. Investments in entities where the feasibility of mining has not yet been established have been impaired. Figures in Rand Non-Current Assets Current Assets Non-Current Liabilities ( ) - ( ) ( ) Current Liabilities - - ( ) - Total

58 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 10. Loans from related parties Figures in Rand Sefateng - Bolepu Shareholders Loan Bolepu Holdings (Pty) Ltd ( ) ( ) - - Total ( ) ( ) - - Sefateng Chrome Mine (Pty) Ltd s shareholding is made up as follows: 55% Majority Shareholder - Corridor Mining Resources (Pty) Ltd - wholly-owned subsidiary of Limpopo Economic Development Enterprise 40% Bolepu Holdings (Pty) Ltd 5% Community The loan bears no interest and has no fixed repayment terms and is, by intent, long-term in nature. 11. Other financial assets Figures in Rand Available-for-Sale Shares Loans & Receivables Business Loans Housing Loans Nkowankowa Motors (Pty) Ltd Northern Training Trust Other Loans Subtotal Provision For Impairment ( ) ( ) ( ) ( ) Total Other Financial Assets Non-Current Assets Shares Loans & Receivables Current Assets Shares Loans & Receivables Total Deferred TAX DEFERRED TAX ASSET Figures in Rand Accelerated Capital Allowances for Tax Purposes

59 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 13. Retirement benefits DEFINED BENEFIT PLAN Consolidated Employees of the Limpopo Economic Development Enterprise Group 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 70% subsidy of medical aid contributions, including savings and retirement. Great North Transport (Pty) Ltd subsidise 100% of AdmedGap contributions in retirement. The current contribution is R79 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. LimDev and Great North Transport (Pty) Ltd embarked on a reduction exercise to better manage their post-employment 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 postemployment health care subsidisation. The above mentioned changes do not affect the current year financial statements but could affect the next years should the change be accepted by the current members. Enterprise Employees of Limpopo Economic Development Enterprise participate in Bonitas Medical Aid Fund administered by Medcheme (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. Figures in Rand Carrying Value Present Value of The Defined Benefit Obligation - Wholly Unfunded ( ) ( ) ( ) ( ) Movements for the Period Opening Balance Unfunded Obligation Net Expense Recognised in the Income Statement Current Service Cost Interest Cost Actuarial (Gains) Losses Contribution Payments ( ) ( ) ( ) ( ) The above mentioned expense is included in the line item operating expenses on the statement of comprehensive income. Key Assumptions Used Assumptions used on Last Valuation On 31 March 2010: Average Retirement Age Discount Rates Used 9.25% 8.25% 9.25% 8.25% Health Care Cost Inflation 7.75% 7.25% 7.75% 7.25% Contribution of Membership at Retirement % % % % Salary Inflation 5.75% 6.75% 5.75% 6.75% Proportion Married At Retirement 85% 85% 85% 85% 59

60 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 13. Retirement benefits (CONTINUED) 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 9.1% in past service contractual liabilities and a 9.5% increase in service costs. Variation of -1% will result in a decrease of 8% in past service contractual liabilities and a -8.3% decrease in service costs. Mortality Variation of +1% will result in a decrease of 8.5% in past service contractual liabilities and an 8.8% decrease in service costs. Variation of -1% will result in an increase of 9.8% in past service contractual liabilities and a 10.2% increase in service costs. 14. Long term pre-paid expenses Details on prepaid expenses as per Great North Transport (Pty) Ltd as follows: Figures in Rand Scania Finance (Pty) Ltd - Deposit on Busses (Operating Leases) Non-Current Portion Current Portion ( ) ( ) - - Total Properties held-for-sale Figures in Rand Properties Held-for-Sale Properties held-for-sale comprise residential houses and stands that have been acquired as a result of repossessions on the default of repayment of debt. Properties are sold on an open and active market as soon as there is a willing buyer. Title deeds have not been obtained for all houses owned by the Group. The Group is in the process of obtaining title deeds. A register of particulars of these houses is maintained at the registered office of the Enterprise and is available for inspection. 16. Inventories Figures in Rand Finished Goods Production Supplies Consumables Vehicles Inventories (Write-Downs) - ( ) - - Total

61 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 17. Trade and other receivables Figures in Rand Trade Receivables VAT Prepayments Other Receivables Provision for Bad Debts ( ) ( ) ( ) ( ) Total Cash And Cash Equivalents Figures in Rand Cash on Hand Bank Balances Short-Term Deposits Bank Overdraft ( ) ( ) ( ) ( ) ( ) ( ) Current Assets Current Liabilities ( ) ( ) ( ) ( ) Total ( ) ( ) The Enterprise has an overdraft facility with ABSA bank (account number: ) to the value of R The facility is guaranteed for the value of R The Enterprise has provided the following guarantees: Contract Number Beneficiary Guarantee Amount Telkom S/A (Pty) Ltd Eskom Eskom Non - Current Assets Held-For-Sale ASA Metals, an associate of LimDev, operates a Ferrochrome Smelter in the Burgersfort area in Limpopo Province. Limdev holds 40% of its equity and there are plans to dispose of 30% of the holding. The disposal was planned to have been finalised by December 2009 but was temporarily put on hold. The disposal plan is now underway and should be finalised in the next twelve months. ASSETS AND LIABILITIES Figures in Rand Non-Current Asset Held-For-Sale: ASA Metals

62 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 20. SHARE CAPITAL Figures in Rand Authorised Central Division Ordinary Shares of R1 Each Lowveld Division Ordinary Shares of R1 Each Northern Division Ordinary Shares of R1 Each Total Issued Central Division Ordinary Shares of R1 Each Lowveld Division Ordinary Shares of R1 Each Northern Division Ordinary Shares of R1 Each Total Reserves Figures in Rand Comprising of: Non-distributable Reserve Revaluation of Available-for-Sale Financial Assets Total Other financial liabilities Figures in Rand Held at amortised cost Total SA The loan is interest free & is payable by way of a rebate of.08 cents per litre of petrol purchased from Total SA Limited Development Bank of South Africa Ltd The loan is ring-fenced & a service level agreement is to be entered into between DBSA & Limpopo Economic Development Enterprise whereby this amount will be incorporated into new business amounting to R178m. The loan is interest free & efforts are underway to settle as per the loan conditions Development Bank of South Africa Ltd - Revolving Fund The loan is repayable in six month instalments & is now due. Interest is charged at 9.12% per annum Non-current liabilities At amortised cost Current liabilities At amortised cost Total

63 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 23. Provisions 2010 Figures in Rand Reconciliation of Provisions Opening Balance Additions Total Environmental Rehabilitation Liability Non-Current Liabilities Current Liabilities Total Trade and other payables Figures in Rand Trade Payables Deposits on Demand VAT Accrued Leave Provision-Retrenchment Fund Accrued Leave & Bonus Sundry Creditors Accrued Expense Other Payables Amounts Received in Advance Total REVENUE Figures in Rand Casual Passengers Rendering of Services Rental Income Interest Received Loan & Rental Fees Private Hire Revenue Sundry Income Total

64 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 26. Operating profit (loss) Figures in Rand Dividends Received Operating Lease Charge: Premises: Contractual Amounts Motor Vehicles: Contractual Amount Equipment: Contractual Amounts Lease Rentals on Operating Lease: Contractual Amounts Lease Rentals on Operating Lease - Other: Contractual Amounts Profit on Sale Of Property, Plant & Equipment Impairment of Intangible Assets Profit on Sale of Businesses (or Subsidiaries Joint Ventures & Associates) Impairment on Business Loans Amortization Profit (Loss) on Sale of Investment Properties - ( ) - - Legal Expenses - ( ) - - Impairment on Assets Property, Plant & Equipment Depreciation on Property, Plant & Equipment Depreciation on Investment Property Employee Costs Amortization on Intangible Assets Impairments of Investments in Associates Impairment of Investments in Subsidiaries Impairments of Investments in Shares

65 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 27. Investment revenue Figures in Rand Dividend Revenue Subsidiaries - Risima Housing Finance Corp Dividends Received Other Investment Income Bank Interest Received from Loans Total Finance costs Figures in Rand Group Companies Finance Leases Bank Interest Paid Interest Paid on Loans ( ) Total Taxation Figures in Rand Reconciliation of the Tax Expense (Income) South African Normal Taxation Current Period Deferred Originating & Reversing Temporary Differences Recognition of Previously Unrecoginsed Tax Asset - ( ) - - ( ) ( ) ( ) Total ( ) ( ) - - No provision has been made for normal or deferred tax for the Enterprise and certain of its wholly-owned subsidiaries because they are exempt from income tax in terms of Section 10(1)(cA) of the Income Tax Act. The sub-subsidiaries (subsidiaries of Corridor Mining Resources (Pty) Ltd) of LimDev is however not exempt from the Income Tax Act and resulted in the taxation above. The Enterprise has made representation to the tax authorities to extend the exemption to all companies within the Group. 65

66 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 30. Auditors remuneration Figures in Rand Audit Fees Cash generated from (used in) operations Figures in Rand Profit before Taxation Adjustments for: Depreciation & Amortisation Profit on Sale of Assets ( ) ( ) ( ) ( ) Income from Equity Accounted Investments ( ) ( ) - - Dividends Received ( ) ( ) ( ) ( ) Interest Received ( ) ( ) ( ) ( ) Finance Costs Minority Interest Impairment Loss Movements in Retirement Benefit Assets & Liabilities Movements in Provisions Available-for-Sale Financial Asset Adjustment Impairment Losses Purchase of Subsidiaries - - ( ) - Changes in Working Capital: Inventories ( ) (87 949) Trade & Other Receivables ( ) ( ) Pre-Paid Expenses ( ) - - Assets Classified as Held-for-Sale - ( ) - - Properties Held-for-Sale ( ) - - Trade & Other Payables ( ) ( ) Total ( ) ( )

67 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 32. Commitments OPERATING LEASES - AS LESSEE Figures in Rand Minimum lease payments due within one year in second to fifth year inclusive Total The Enterprise leased office equipment which has subsequently expired. No renewals or purchase options have been exercised and no escalation is applicable as the Enterprise did not enter into new operating lease agreements. The Group leases office equipment, property and busses under operating leases. The operating leases typically runs 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 (3) years. OPERATING LEASES - AS LESSOR (INCOME) Figures in Rand Minimum lease payments due within one year in second to fifth year inclusive later than 5 years Total Certain of the Group s properties are held to generate rental income. Rental of properties are expected to generate rental yields of 12% on an ongoing basis. Lease agreements have terms from 1 to 6 years. There are no contingent rents. 33. Contingencies The following contingencies are in place, and are stipulated in the financial statements of the subsidiaries of the Group namely Enterprise; Risima Housing Finance Corporation (Pty) Ltd; Corridor Mining Resources (Pty) Ltd and Kulungisa (Pty) Ltd. Enterprise The Managing Director s contract expired on 31 July 2010 (after year end) and was not renewed. In terms of the contract, there is a 6 month notice period that should have been given to the Managing Director by LimDev. This notice was not given to the Managing Director and at year end the possible financial implications to LimDev are unknown. Kulungisa (Pty) Ltd Litigation is in the process against the company with Mr Z Osman who demands transfer of property (The Company) from the shareholder. The transfer was contested by Total SA, based on the contract between Kulungisa or the shareholder and Total SA. The amount of the claim intimated is R The Enterprise s lawyers and management consider the likelihood of the action against the Enterprise being successful as unlikely and the case should be resolved within the next year. Risima Housing Finance Corporation (Pty) Ltd As a result of an increase in the demand for the housing loan products offered by the company, the company has incurred commitments to provide housing finance amounting to approximately R18.7 million at year end. The company has R22.9 million in cash resources to fulfil these commitments. Corridor Mining Resources (Pty) Ltd Corridor Mining Resources (Pty) Ltd is a member of the Pruison Water Forum. Future contributions cannot be reliably established at year end. The company has capital commitments regarding contributions to their subsidiaries, associates and joint ventures. These entities are in the process of exploration and evaluation for mining. The company will fund these commitments through a shareholder s loan and proceeds from disposing of investments as soon as the entities commence mining. These contributions cannot be reliably established at year end. Sefateng Chrome Mine (Pty) Ltd A litigation claim was instituted against Sefateng Chrome Mine (Pty) Ltd regarding taxation of the Bills of Costs which is estimated at R in the event that Sefateng Chrome Mine (Pty) Ltd is unsuccessful in recovering the costs from the plaintiff. 67

68 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 34. Related parties Relationships Parent entity Subsidiaries Refer to annexure A and note 6 Associates Refer to annexure B and note 8 Directors and Executive management - related party transactions Post employment benefit plan for employees of entity Joint ventures Sub-subsidiaries Subsidies received from Department Department of Economic Development Environment and Tourism Refer to annexure C Multikor Southern Life Metropolitan Life Medscheme Refer to annexure D Refer to annexure E Department of Roads and Transport RELATED PARTY BALANCES Figures in Rand Loan accounts - Owing (to) by related parties Bolepu Holdings (Pty) Ltd ( ) ( ) - - Loan accounts of Subsidiaries & Associates are only shown in the Annexures to the financial statements - Refer to Annexures A & B Dividends received from subsidiaries Risima Housing Finance Corporation (Pty) Ltd Related party transactions Subsidies received Department of Roads & Transport Department of Economic Development Environment & Tourism Interest paid to (received from) related parties VDC Investments (Pty) Ltd Great North Transport (Pty) Ltd Capitol Hill (Pty) Ltd - - ( ) ( ) ASA Metals (Pty) Ltd ( ) ( ) ( ) ( ) Mahube Mining (Pty) Ltd ( ) ( ) - - Bopedi Shopping Centre (Pty) Ltd ( ) - ( ) DIRECTORS EMOLUMENTS Refer to Annexure F 68

69 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 36. Prior period errors Sefateng Chrome Mine (Pty) Ltd The exploration and evaluation expenditure was incorrectly recorded due to incorrect capitalisation of these costs in accordance with IFRS 6. The loan from Bolepo Holdings (Pty) Ltd was overstated in the prior year, this had an impact on the loan balance and exploration and evaluation expenditure. Tshepong Chrome (Pty) Ltd, Kumong Chrome (Pty) Ltd, Mokopane Kodumela Mining (Pty) Ltd and Fumani Green Stone (Pty) Ltd The exploration and evaluation expenditure was incorrectly recorded due to incorrect capitalisation of these costs in accordance with IFRS 6. Capitol Hill (Pty) Ltd In the prior years, land was depreciated along with buildings. This reversal of depreciation amounted to a decrease in accumulated depreciation of R Other financial assets Cashbuild Ltd shares originally purchased at R was not stated at fair value in the prior years. A restatement to accounts for this revaluation of available-for-sale financial asset amounted to R The correction of the errors resulted in adjustments as follows: Figures in Rand Statement of Financial Position Investment Properties Investment Properties Other Financial Assets Trade & Other Receivables Retained Income - ( ) - ( ) Exploration & Evaluation Asset Bolepo Loan Account - ( ) - - Profit or Loss Fair Value Adjustment - ( ) - ( ) Exploration Costs - ( ) 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. The Group s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. A risk management committee was established by the holding company. Risk management is carried out by this committee under policies approved by the board of directors. The committee identifies and evaluates financial risks in close co-operation with the Group s operating units. The Board of Directors has overall responsibility for the establishment and oversight of the Group s risk management framework. The chief executive officer and the administrative and marketing directors are responsible for developing and monitoring the Group s risk management procedures. This note presents information about the Group s exposure to each fo the above risks, the Group s objectives, policies and processes for measuring and managing risk, and the Group s management of capital. Further quantitative disclosures are included throughout these financial statements. The Group s risk management procedures are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The chief executive officer, together with the administrative and marketing directors, oversees the risk management framework and reviews the adequacy thereof. 69

70 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group s reputation. 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. The table below analyses the Group s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Carrying Amount Contractual Cash Flows Due in Less than a Year More than Three Years As at March Loans from Group Companies ( ) ( ) - ( ) Loans from Related Parties ( ) ( ) - ( ) Finance Lease Obligation ( ) ( ) ( ) ( ) Other Financial Liabilities ( ) ( ) ( ) (65 777) Bank Overdraft ( ) ( ) ( ) - Trade & Other Payables ( ) ( ) ( ) - As at March Loans from Related Parties ( ) ( ) - ( ) Other Financial Liabilities ( ) ( ) ( ) (65 777) Finance Lease Obligation ( ) ( ) ( ) ( ) Trade & Other Payables ( ) ( ) ( ) - Bank Overdraft ( ) ( ) ( ) - Carrying Amount Contractual Cash Flows Due in Less than a Year More than Three Years As at March Loans from Group Companies ( ) ( ) - ( ) Loans from Related Parties ( ) ( ) ( ) - Other Financial Liabilities ( ) ( ) ( ) - Trade & Other Payables ( ) ( ) ( ) - As at March Bank Overdraft ( ) ( ) ( ) - Loans to Group Companies ( ) ( ) - ( ) Other Financial Liabilities ( ) ( ) ( ) - Trade & Other Payables ( ) ( ) ( ) - Bank Overdraft ( ) ( ) ( ) - These loans are unsecured and have no fixed terms of repayment, but by intent are of a long term nature except for Great North Transport (Pty) Ltd amouting to R and Risima Housing Finance Corporation(Pty) Ltd amounting to R Refer to note 9. 70

71 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS Interest Rate Risk The Group s interest rate risk arises from long-term borrowings, investments and cash equivalents. Financial instruments issued at variable rates expose the company to cash flow interest rate risk. Financial instruments issued at fixed rates expose the company to fair value interest rate risk. The Group generally adopts a policy of ensuring that its exposure to changes in interest rates is on a floating rate basis. No financial instruments are used to hedge against interest rate risks. Due in less than a year Due in 1 to 2 years Due in 2 to 3 years Due in 3 to 4 years Due after 5 years Cash Flow Interest Rate Risk Trade & other Receivables Loans to Related Parties Cash in Current Banking Institutions Other Financial Assets Finance Leases ( ) ( ) Due in less than a year Due in 1 to 2 years Due in 2 to 3 years Due in 3 to 4 years Due after 5 years Cash Flow Interest Rate Risk Trade & Other Receivables Loans to Related Parties Loans trom Related Parties ( ) Cash in Current Banking Institutions ( ) Other Financial Assets & Due in less than a year Due in 1 to 2 years Due in 2 to 3 years Due in 3 to 4 years Due after 5 years Fair Value Interest Rate Risk DBSA Loan ( ) Fixed Term Deposit

72 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS CREDIT RISK Credit risk is managed on a group basis. Credit risk consists mainly of cash deposits, cash equivalents and trade debtors. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party. Financial assets exposed to credit risk at year end were as follows: Figures in Rand Cash & Cash Equivalents ( ) ( ) Trade & Other Receivables Other Financial Assets Total Figures in Rand Trade & Other Receivables Gross Impairment Gross Impairment Not Past Due ( ) ( ) Past Due (0-30 days) ( ) ( ) Past Due ( days) ( ) ( ) Total ( ) ( ) Other Financial Assets Gross Impairment Gross Impairment Not Past Due ( ) ( ) Past Due (0-30 days) ( ) - - Past Due ( days) ( ) ( ) Total ( ) ( ) Figures in Rand Trade & Other Receivables Gross Impairment Gross Impairment Not Past Due ( ) ( ) Past Due (0-30 days) ( ) - - Past Due ( days) ( ) ( ) Total ( ) ( ) Other Financial Assets Gross Impairment Gross Impairment Not Past Due ( ) ( ) Past Due (0-30 days) ( ) - - Past Due ( days) ( ) ( ) Total ( ) ( ) 72

73 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS The movement in the allowance for impairment during the year was as follows: Figures in Rand Trade & Other Receivables Balance at the Beginning of the Period ( ) ( ) ( ) ( ) Impairment (Gain)/Loss Recognised ( ) ( ) ( ) Total ( ) ( ) ( ) ( ) Figures in Rand Other Financial Assets Balance at the Beginning of The Period ( ) ( ) ( ) ( ) Impairment (Gain)/Loss Recognised ( ) ( ) ( ) Total ( ) ( ) ( ) ( ) Fair Values Fair values versus carrying amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows: Figures in Rand Trade & Other Receivables Other Financial Assets Cash & Cash Equivalents ( ) ( ) Trade & Other Payables ( ) ( ) ( ) ( ) Finance Lease Obligation ( ) ( ) - - Other Financial Liabilities ( ) ( ) ( ) ( ) Total ( ) Basis for determining fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments reflected in the table above: Non-derivitive financial liabilities Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Short term trade payables are not discounted. Trade, other receivables and cash and cash equivalents The fair value of trade, other receivables and cash and cash equivalents is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. Short term trade receivables are not discounted. 73

74 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 38. Going concern The Group 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 main shareholder indicated that the Limpopo Economic Development Enterprise, Trade and Investment Limpopo and Limpopo Business Support Agency all of which are economic development agencies under the Department of Economic Development, Environment and Tourism should establish a single economic development agency for the Limpopo Province before the end of the 2010/2011 financial year. The current Board of Directors will be dissolved and an interim Board of Directors will be appointed over the single economic development agency as per the main shareholder s pronouncement. The process must be completed by 31 March Subsequent events Great North Transport (Pty) Ltd Subsequent to year end GNT, a full subsidiary of LimDev, declared and paid a dividend of R19 per share amounting to R

75 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES TO The Group FINANCIAL STATEMENTS 40. Purchases subsequent to year end FIFA TM World Cup Expenditure Tickets Acquired Quantity R Quantity R Tickets Acquired after Year End 31 March Distribution of Tickets after Year End Clients/Stakeholders Accounting Authority Accounting Officer Senior Management Other Employees Total Merchandise Acquired after Year End 31 March

76 ANNEXURE A Limpopo Economic Development Enterprise and its Subsidiaries and Associates Investments in Subsidiaries 31 March 2010 % Holding Share Investment Loan Account Total Figures in Rand Capitol Hill (Pty) Ltd Corridor Mining Resources (Pty) Ltd Great North Transport (Pty) Ltd ( ) ( ) Kulungisa (Pty) Ltd Mapulaneng Investment Enterprise (Pty) Ltd ( ) ( ) ( ) ( ) Risima Housing Finance Corporation (Pty) Ltd ( ) ( ) VDC Investments (Pty) Ltd ( ) ( ) ( ) ( ) Less: Less Impairments (2 024) (1 924) ( ) ( ) ( ) ( ) Interest on Consolidated Subsidiaries

77 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Statements for the Year Ended 31 March 2010 ANNEXURE B Investments in Associates 31 March 2010 Principal Business Reporting Date % Holding Share Investment Loan Account Total Figures in Rand ASA Metals (Pty) Ltd Mining 31/12/ AttaClay (Pty) Ltd Mining 31/06/ Bopedi Shopping Centre (Pty) Ltd Commercial Property 28/02/ FM Holdings Shares Management & Marketing Furniture Management & Marketing Ltd Management & Marketing Glenrand MIB Northern Province Insurance 30/06/ Lebowa Advertising (Pty) Ltd Advertising 31/12/ Mahube Mining (Pty) Ltd Exploration & Mining 28/02/ Vanadium & Magnetite Exploration & Development Co. (Pty) Ltd Prospecting Maruleng Mining & Construction (Pty) Ltd Prospecting Mkhuhlu Bakery Bakery Mokopane Mall (Pty) Ltd Commercial Property 28/02/ OK Bazaars (Venda) Ltd Retail 30/06/ Rent-A-Sign Lebowa (Pty) Ltd Advertising The New Chuene Resort (Pty) Ltd Leisure Less Impairments ( ) ( ) ( ) ( ) ( ) ( ) Attributable Share of Post-Acquisition Retained Earnings Reclassification of 30% Shareholding in ASA Metals (Pty) Ltd to Assets Held-for-Sale ( ) ( ) - - ( ) ( ) Interest on Consolidated Associates

78 ANNEXURE c Limpopo Economic Development Enterprise and its Subsidiaries and Associates Related party transactions as at 31 March 2010 Director Directorship/Membership/Interest Transaction entered into with LimDev PJ Malabela CS Mathabatha Corridor Mining Resources (Pty) Ltd ASA Metals (Pty) Ltd Corridor Mining Resources (Pty) Ltd Glenrand MIB Limpopo (Pty) Ltd ASA Metals (Pty) Ltd Great North Transport (Pty) Ltd Subsidiary of LimDev. Refer Annexure A An Associate of LimDev. Refer Annexure B Subsidiary of LimDev. Refer Annexure A An Associate of LimDev. Refer Annexure B An Associate of LimDev. Refer Annexure B Subsidiary of LimDev. Refer Annexure A D Kourtoumbellides Corridor Mining Resources (Pty) Ltd Subsidiary of LimDev. Refer Annexure A NH Mkhumane Corridor Mining Resources (Pty) Ltd Subsidiary of LimDev. Refer Annexure A HA Ngobeni Risima Housing Finance Corporation (Pty) Ltd Sefateng Chrome Mine (Pty) Ltd Subsidiary of LimDev. Refer Annexure A Sub-subsidiary of LimDev. Refer Annexure E MH Lekota Great North Transport (Pty) Ltd Subsidiary of LimDev. Refer Annexure A LP Kekana TM Madula Bopedi Shopping Centre (Pty) Ltd OK Bazaars (Venda) Ltd Capitol Hill Investment Company (Pty) Ltd Mapulaneng Investment Enterprise (Pty) Ltd Sefateng Chrome Mine (Pty) Ltd VDC Investments (Pty) Ltd An Associate of LimDev. Refer Annexure B An Associate of LimDev. Refer Annexure B Subsidiary of LimDev. Refer Annexure A Subsidiary of LimDev. Refer Annexure A Sub-subsidiary of LimDev. Refer Annexure E Subsidiary of LimDev. Refer Annexure A NE Rampedi Corridor Mining Resources (Pty) Ltd Subsidiary of LimDev. Refer Annexure A STM Phetla Risima Housing Finance Corporation (Pty) Ltd Subsidiary of LimDev. Refer Annexure A MJ Shirinda Risima Housing Finance Corporation (Pty) Ltd Subsidiary of LimDev. Refer Annexure A M Muneri Kulungisa (Pty) Ltd Subsidiary of LimDev. Refer Annexure A M Maphutha Risima Housing Finance Corporation (Pty) Ltd Sefateng Chrome Mine (Pty) Ltd An Associate of LimDev. Refer Annexure B Sub-subsidiary of LimDev. Refer Annexure E HK Makgae Great North Transport (Pty) Ltd Subsidiary of LimDev. Refer Annexure A MM Molepo VDC Investment Company (Pty) Ltd Capitol Hill Investment Company (Pty) Ltd Subsidiary of LimDev. Refer Annexure A Subsidiary of LimDev. Refer Annexure A L Masia Corridor Mining Resources (Pty) Ltd Subsidiary of LimDev. Refer Annexure A SV Chepape LJ Sennelo Corridor Mining Resources (Pty) Ltd Risima Housing Finance Corporation(Pty) Ltd Corridor Mining Resources (Pty) Ltd Great North Transport (Pty) Ltd Subsidiary of LimDev. Refer Annexure A Subsidiary of LimDev. Refer Annexure A Subsidiary of LimDev. Refer Annexure A Subsidiary of LimDev. Refer Annexure A 78

79 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Statements for the Year Ended 31 March 2010 ANNEXURE D Investments in Joint Ventures Principal Business Reporting date % Share Investment Loan Account Total Figures in Rand Rock Island (Pty) Ltd Prospecting 31/03/ Less Impairments ( ) ( ) ( ) ( ) ( ) ( ) Interest on consolidated Joint Ventures Joint Venture of Corridor Mining Resources (Pty) Ltd.All Inter-group transactions and balances are eliminated on consolidation and thus no balances are reflected in the Group Financial Statements. 79

80 ANNEXURE E Limpopo Economic Development Enterprise and its Subsidiaries and Associates Investments in Sub - subsidiaries 31 March 2010 % Share Investment Loan Account Total Figures in Rand Kodumela Mining (Pty) Ltd Sefateng Chrome (Pty) Ltd Khumong Chrome (Pty) Ltd Fumani Green Stone (Pty) Ltd Tshepong Chrome (Pty) Ltd Autumn Spar Trading 625 (Pty) Ltd Less: Provision for irrecoverable amounts and impairments in value of shares Interest on consolidated sub-subsidiaries ( ) ( ) ( ) ( ) Subsidiaries of Corridor Mining Resources (Pty) Ltd. All inter-group transactions and balances are eliminated on consolidation and thus no balances are reflected in the Group Financial Statements

81 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Statements for the Year Ended 31 March 2010 ANNEXURE F Directors & Executive Management Remuneration for the Year End 31 March 2010 Non Executive Directors Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total PJ Malabela (Chairperson) LimDev ASA Metals CMR NM Mkhumane LimDev (Deputy Chairperson) Great North Transport D Kourtoumbellides LimDev CMR M Lekota LimDev Great North Transport SV Chepape LimDev CMR Risima Housing Finance Corp DL Mabilu LimDev (Resigned 31/08/2009) Risima Housing Finance Corp HK Makgae LimDev Great North Transport MP Maleta LimDev M Maphutha LimDev Risima Housing Finance Corp L Masia LimDev CMR

82 ANNEXURE F (CONTINUED) Limpopo Economic Development Enterprise and its Subsidiaries and Associates Directors & Executive Management Remuneration for the Year End 31 March 2010 Non Executive Directors Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total ME Molokomme LimDev HA Ngobeni LimDev Risima Housing Finance Corp LJ Sennelo LimDev CMR Great North Transport Executive Directors Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total S Mathabatha LimDev (Managing Director) ASA Metals Executive Management Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total NE Rampedi CMR STM Phetla LimDev TM Madula LimDev MJ Shirinda Risima Housing Finance Corp M Muneri Great North Transport MM Molepo LimDev LP Kekana LimDev SN Maponya LimDev

83 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Statements for the Year Ended 31 March 2010 ANNEXURE F (CONTINUED) Directors & Executive Management Remuneration for the Year End 31 March 2009 Non Executive Directors PJ Malabela - Chairperson NM Mkhumane - Deputy Chairperson Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total Appointed 1 st Feb 2009 LimDev Appointed 1 st July 2005 LimDev D Kourtoumbellides Appointed 1 st July 2005 LimDev M Lekota Appointed 1 st July 2005 LimDev SV Chepape Appointed 1 st Feb 2009 LimDev DL Mabilu Appointed 1 st Feb 2009 LimDev HK Makgae Appointed 1 st Feb 2009 LimDev MP Maleta Appointed 1 st Feb 2009 LimDev M Maphutha Appointed 1 st Feb 2009 LimDev L Masia Appointed 1 st Feb 2009 LimDev ME Molokomme Appointed 1 st Feb 2009 LimDev HA Ngobeni Appointed 1 st Feb 2009 LimDev LJ Sennelo Appointed 1 st Feb 2009 LimDev PS Ratlou - Chairman Term expired 31 st Jan 2009 LimDev MJ Phaahla (Dr) Term expired 31 st Jan 2009 LimDev JCJ van Schalkwyk Term expired 31 st Jan 2009 LimDev MA Phatudi Term expired 31 st Jan 2009 LimDev MS Muhlari Term expired 31 st Jan 2009 LimDev MJ Modjadji Deceased LimDev DB Letsatsi-Duba Term expired 31 st Jan 2009 LimDev

84 ANNEXURE F (CONTINUED) Limpopo Economic Development Enterprise and its Subsidiaries and Associates Directors and Executive Management remuneration for the year ending 31 March 2009 Executive Directors Entity S Mathabatha (Managing Director) Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total LimDev ASA Metals Non Executive Directors Entity Directors' Emoluments Salaried Remuneration Travel Allowance Performance Bonus Total R Shingange CMR STM Phetla LimDev TM Madula LimDev MJ Shirinda M Muneri Risima Housing Finance Corp. Great North Transport MM Molepo LimDev LP Kekana LimDev SN Maponya LimDev

85 Limpopo Economic Development Enterprise and its Subsidiaries and Associates Group Statements for the Year Ended 31 March 2010 NOTES 85

86 Limpopo Economic Development Enterprise and its Subsidiaries and Associates NOTES 86

87 ABBREVIATIONS AsgiSA BBBEE BFS BUSA CEO CFO CIMA CMR CSI/R EDFD EE The Enterprise FAISA FICA GAAP GDP GEAR GNT The Group HDI HDSA HR HRD IAS IASB IDC IFRS IFRIC King II LEDET LEF LIBSA LimDev Limpopo LED MD MEC MOU MRPDA NCA NCI NEF NGO OHS PFMA PGDS POCA PPP PTO Risima SBU SEDA SADEC SME SMME STATS SA The Dti TIL WSP - Accelerated and Shared Growth Initiative of South Africa - Broad-Based Black Economic Empowerment - Bankable Feasibility Study - Business Unity South Africa - Chief Executive Officer - Chief Financial Officer - Chartered Institute of Management Accountants - Corridor Mining Resources (Pty) Ltd - Corporate Social Investment/Responsibility - Enterprise Development Finance Division - Employment Equity - LimDev - Financial Advisory and Intermediary Services Act - Financial Intelligence Centre Act - Generally Accepted Accounting Practice - Gross Domestic Product - Growth Employment and Redistribution Strategy - Great North Transport (Pty) Ltd - LimDev - Historically Disadvantaged Individuals - Historically Disadvantaged South Africans - Human Resources - Human Resource Development - International Accounting Standards - International Accounting Standards Board - The Industrial Development Corporation - International Financial Reporting Standards - International Financial Reporting Interpretation Committee - King II Report on Corporate Governance - Limpopo Department of Economic Development, Environment and Tourism - Local Enterprise Development Fund - Limpopo Business Support Agency - Limpopo Economic Development Enterprise - Limpopo Local Economic Development - Managing Director - Member of the Executive Council - Memorandum of Understanding - Mineral and Petroleum Resources Development Act - National Credit Act - Non-Controlling Interests - National Empowerment Fund - Non-Governmental Organisation - Occupational Health and Safety - Public Finance Management Act - The Provincial Growth and Development Strategy - Prevention of Organised Crime Act - Public Private Partnerships - Permission To Occupy - Risima Housing Finance Corporation (Pty) Ltd - Strategic Business Unit - Small Enterprise Development Agency - Southern African Development Community - Small and Medium Enterprises - Small, Medium and Micro Enterprises - Statistics South Africa - The Department of Trade and Industry - Trade and Investment Limpopo - Workplace Skills Plan 87

88 LIMPOPO PROVINCIAL MAP ZIMBABWE Musina BOTSWANA Tom Burke Alldays VHEMBE Makhado Thohoyandou Giyani Lephalale WATERBERG Thabazimbi Vaalwater Modimolle Bela-Bela Marken Mokopane Mookgophong CAPRICORN Polokwane GREATER SEKHUKHUNE Tzaneen Letsitele Burgersfort Ohrigstad Bushbuckridge MOPANI Gravelotte Maruleng Phalaborwa KRUGER NATIONAL PARK NORTH WEST Marble Hall Groblersdal GAUTENG Rustenberg Brits Nelspruit Tshwane MPUMALANGA Johannesburg Hazyview Malelane SWAZILAND Komatiepoort Kilometers Main Towns Main Roads 88