201415 INTEGRATED ANNUAL REPORT

B-BBEE LEVEL 1 CONTRIBUTORISO 9001 14001 20001 OHSAS 18001

INTEGRATED ANNUAL REPORT2014 15

For enquiries, contact Dr. Ayanda Vilakazi, Head of CDC Marketing and Communications: [email protected]

mailto:Ayanda.Vilakazi%40coega.co.za?subject=CDC%20Integrated%20Report%202014/15


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THIS IS COEGA

About the Integrated Report Reporting Philosophy 6 Reporting Approach & Changes 6 Scope, Boundaries & Materiality 6 Assurance & Comparability 7 Board Statement of Appreciation, Responsibility & Approval 7 Chairman’s Statement 7 ChiefExecutiveOfficer’sStatement 8About Coega 10 Coega’s Value Propositions 11 Coega Brand Tree 12 Coega Timeline 142014/15 FY Highlights 16Business Model – How CDC Creates Value 20 Business Model Evolution 20 Value Creation 22 Infrastructure Value Creation 24 Organisational Overview & Business Model 26 GlobalFootprint 28 AreaProfile 30 Ownership & Control 32Stakeholders 34Material Issues – Risks & Opportunities 38Governance 42 Corporate Governance Statement 42 Governance Structure 44 Board of Directors 46 Audit & Risk Committee 50 Human Resources & Remuneration Committee 52 Executive Management 54 Programme Directors 56

PErfOrmAnCE & OuTlOOk

Strategic Overview 60Business Overview & Performance 62Operational Performance Overview Investment Attraction 64 Operations 66 InfrastructureDevelopment 68 External Programmes 72 Broad-Based Black Economic Empowerment (B-BBEE) 76 CorporateSocialInvestment(CSI) 78 HumanCapitalSolutions 82 Development,Empowerment&Transformation 86Outlook 88CFO’s Review 92Certificate by Company Secretary 92

AnnuAl fInAnCIAl STATEmEnTS

General Information 96Statement of Directors’ Responsibilities and Approvals 97Directors’ Report 98Independent Auditor’s Report 100Statement of Financial Position 104Statement of Comprehensive Income 105Statement of Changes in Equity 106Statement of Cash Flows 107Notes to the Financial Statements 108Financial Risk Management 116

AdmInISTrATIOn

Sustainability 134Acronyms & Abbreviations 138Our Stakeholders Say 140Appendix 1 – Corporate Performance Results of 2014/15 FY 142Appendix 2 – Stakeholder Management 144Appendix 3 – Awards 2014/15 FY 146

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R441.8-million

REVENUE GENERATEDNEW INVESTMENTS01SELF-GENERATED REVENUE

ANNUAL REPORT 2013/2014 | SECTION 01 - GENERAL OVERVIEW

T H I S I S C O E G A

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ABOUT THE INTEGRATED REPORT

REPORTING PHILOSOPHy

The Coega Development Corporation has embarked on a journey to achieve integrated reporting in compliance with the International Integrated Reporting <IR> Framework. The CDC supports the view of the International Integrated Reporting Council(IIRC)that,intheongoingwakeoftheglobalfinancialcrisis, there is a need to forge stronger links between investment decisions, corporate behaviour and reporting, in order to promotefinancialstabilityandsustainabledevelopment.

The <IR> Framework moves CDC’s reporting into the heart of the organisation, with the integrated reporting process stimulating integrated thinking and a sharpened focus on how the external environment and stakeholder needs and concerns informtheidentificationofmaterialissues.Theseinturndrivethe CDC’s strategic response and performance outcomes, aimed at creating value over time for both the CDC and its broad base of stakeholders.

Essentially, the Integrated Report provides stakeholders and investors with clear, concise, connected and comparable information about how the CDC’s strategy, governance, performance and prospects – in the context of its external environment – lead to the creation of value over the short, medium and long term. It is intended to give a clear picture of the CDC’s current position, where it is heading and how it plans to get there – enabling stakeholders and investors to make informed assessments of the CDC’s performance and its ability to create stakeholder and shareholder value in the future.

Ultimately, the goal is to support engagement and informed decision-making by stakeholders and investors on future investments and other initiatives with the CDC.

The CDC’s 2014/15 Integrated Report presents the Company’s mandate, strategy, business model, governance structure, performance review and future outlook – thus demonstrating how the CDC responds to its context, stakeholders, risks and opportunities in its drive to create sustainable value, with a core focus on socio-economic developmental needs of the Eastern Cape.

REPORTING APPROACH AND CHANGES

The 2013/14 Integrated Annual Report of the CDC represented thefirststepontheorganisation’s<IR>journey.This2014/15Integrated Report acknowledges that achieving compliance with the Framework is a process of continuous improvement. Thus, the structure of this report departs from that of previous years to more closely align with the guiding principles and

content requirements of the <IR> Framework, and to thereby improve on the logical connectivity of information presented.

The content focuses on connecting performance more closely to strategy and material issues, in line with the guiding principles of the <IR> Framework and the King III corporate governance code. The <IR> Framework speaks to shareholders and stakeholders alike – as all impact on, and are affected by, the organisation. The CDC will continue to adopt best practices as the framework evolves, and to ensure regular and effective communication with all stakeholders including investors, suppliers and communities.

The following reporting standards have been applied in the preparation of this report:

• <IR> Framework v1.0, International Integrated Reporting Council, December 2013;

• Public Finance Management Act (PFMA), Act 1 of 1999;• CompaniesAct,Act71of2008;• International Financial Reporting Standards (IFRS); and• King Code of Corporate Governance for South Africa

(The Institute of Directors in Southern Africa) September 2009 (King III).

SCOPE, BOUNDARIES AND mATERIALITy

Thisreportcoversthefinancialyear2014/15fromtheperiod1 April 2014 to 31 March 2015. It encompasses all operations related to the mandate of the CDC, including its role as the license holder to develop and operate the Coega IDZ, and as an implementing agent (IA) for certain key government departments in support of the Infrastructure Delivery Programme (IDP), an initiative of the South African government to fast-track and improve public sector infrastructure delivery. In this regard, the CDC has adopted the infrastructure delivery managementsystem(IDMS)asthemodelthatensuresefficientand effective public sector infrastructure development.

The CDC operates in a dynamic environment, where stakeholders, funders, investors, tenants and external services clients all have the ability to impact on the organisation’s performance. These material issues are addressed at relevant points throughout the report.This report also addresses the strategy and performance of the CDC, including its commercial and project management services, and its management of the Nelson Mandela Bay Logistics Park. The activities of investors, tenants and the adjacent Port of Ngqura are addressed only to the extent that theyimpactupon,orareservicedorinfluencedby,theCDC’sexecution of its strategy.

ASSURANCE AND COmPARABILITy

The CDC employs a rigorous system of internal controls as well as external oversight to assure the quality of its reported results and its adherence to international standards.

Wherever possible, the reported results for the year under review are presented in a comparative way, compared to at leastoneof:thepreviousyear,cumulativeforthepastfiveyears,and/or cumulative since inception.

Financial controls and risk management are subject to review by Internal Audit. As a public entity, the CDC’s financialstatements are independently reviewed and reported on by the Auditor-General of South Africa.

Similarly,non-financialinformationissubjecttointernalreviewand control in accordance with the standards set by the Board, and independent external verification that has taken placeduring the period under review.

The Board provided ongoing support to create an environment with risk management mechanisms that strengthened the CDC and enhanced governance.

Internal assurances included internal audit, risk management and executive management committee supervision, with additional oversight from the Board, sub-committees and the CDC’s project committees. External assurance is provided by the Auditor-General of South Africa.

Through the independent external verification, the CDCobtainedthefollowingstandardsandcertification intheyearunder review:

• B-BBEE Level 1 status, in accordance with SANAS;• ISO15489(RecordsManagement);• ISO 31000 (Risk Management); and• SANS 16001 (Wellness and Disease Management, incl. HIV & TB).

TheCDCisalsocertifiedto:

• ISO 9001 (Quality Assurance);• OHSAS18001(OccupationalHealthandSafety);and• ISO 14001 (Environmental Management).

The CDC undertakes an annual independent project management audit that is based on internationally accepted project management standards, developed by the Project Management Institute (PMI), such as, OPM3 and P3M3.

This audit measures project management practices and benchmark the CDC against similar organisations. For the year

under review, the Company achieved a 3,34 level, indicative that it has project management procedures and systems that are practiced consistently throughout the organisation.

BOARD STATEmENT Of APPRECIATION, RESPONSIBILITy AND APPROVAL

The Board expresses its appreciation to the chair of the Parliamentary Portfolio Committee on Trade and Industry, Ms Joanmariae Fubbs; the Minister of Trade and Industry, Dr Rob Davies; the Minister of Economic Development, Mr Ebrahim Patel; and their respective deputy ministers and directors-general.

The Board also expresses its appreciation to the Premier of the Eastern Cape, Mr Phumulo Masualle; the Eastern Cape MEC for Finance, Economic Development, Environmental Affairs and Tourism, Mr Sakhumzi Somyo; and their respective heads of department, for their support, oversight and leadership.

A special thanks to CDC staff and external stakeholders who continue to uphold the values and high performance standards of the organisation.

The CDC Board, assisted by its committees, is ultimately responsible for oversight of the integrity of the integrated report. The Board has collectively reviewed the output of the integrated reporting process and has concluded that the 2014/15 Integrated Report has made substantial progress over the previous year in meeting the requirements of the International Integrated Reporting Framework v1.0.

CHAIRmAN’S STATEmENT

Envisioned as a project to transform the Eastern Cape and to address unemployment, poverty and inequality by attracting foreign and local investment, the Coega IDZ – and the CDC as a development agency – continues to go from strength to strength.Iamconfidentthatthebestisyettocome.

Indicators remain strong on the critical role that CDC plays as social and economic agent of change for the Eastern Cape, and in the period under review there is much to celebrate.

It is encouraging to see the CDC achieving its key performance objectives virtually year-on-year since the onset of the fiveyear strategy in 2010, which ended on 31 March 2015. The achievements continue to roll through, particularly in investment attraction, job creation, skills development, human capital development in general, small business growth and in corporate social investment.

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Moreover, the CDC has also edged closer and closer over the period toward financial sustainability, largely as a resultofafocusonadiversifiedproductandserviceoffering.Newbusiness lines, infrastructure management services and effective consulting to government institutions have expanded the CDC’s income lines and allowed for a wider development footprint nationally

Theseaccomplishmentsareparticularlysignificant inthefaceof the many shifting sands which impact complex development, such as slower economic growth, high and growing unemployment rates coupled with a skills gap, and competition from other industrial investment locations across the globe. The attraction of 19 investors – either new or expansions of existinginvestments–isafirsteverforanySouthAfricanIDZ;and represents the momentum gained by the CDC over the five-yearstrategicplanningperiod.

Looking ahead, three strategic areas form the basis of the new fiveyearsustainablegrowthstrategicplanfortheorganisation,namely financial self-sustainability, business intelligence andstrategic partnerships; inspired by the new policy and legislative environmentandanauthenticrequirementforfinancial,socialand environmental sustainability.

However, we also face a new set of challenges. Over the next fiveyearsthecriticaltaskistoremainrelevant,profitableandin a good shape to ensure the sustainability of the organisation. This includes the continued progression of an internal strategy to aggressively pursue both domestic and international direct investment in the Coega IDZ and Eastern Cape; to remain the leader in industrial development, while leveraging the associated social and economic gains that accompany such investment.

Our new agenda will require innovative leadership and new approaches to business, and I have no doubt that the Chief Executive and his team, CDC employees, the Board of Directors and Sub-committee members will rise to this challenge.

CEO’S STATEmENT

At the close of our five-year strategic period, it is fitting toreview the achievements surrounding what has been an incredibly trying period, but also an intensely rewarding one. I can,withconfidence,reportthattheCDChasdoneincrediblywell. It has not been easy and we have had to push ourselves to limits unseen or explored before. But the proof is in the results – and from my view, I see a steady trendline against all our KPI’s showing positive achievements between 2010/11 and 2014/15.

Again, in the 2014/15 FY, the CDC made excellent headway. We achievedour financial targets,made significant progresswithstrategy,includingtheimplementationofanewfive-yearplan,and we continued to touch the lives of many South Africans in the Eastern Cape.

Coega IDZ remains the preferred investment destination for foreign and local direct investment in South Africa.

Self-generated revenue increased and sodidourprofitability.The value of our domestic and foreign investment was higher than the previous year. Nearly 15 000 jobs were created and 8 000 individuals were empowered with new skills throughtraining and human capital development. We achieved a SMME participation in CDC contracts of nearly half the value of procurement in the 2014/15 FY. By securing investments with a valueofoverR1.8-billion in 2014/15 FY, theCDCmade asignificantcontributiontoimprovingthelivesofindividualsandcommunities.

Guided by our long-term vision to become the leading catalyst for social development and economic growth, a set of values predicated on advance business and human interests, a clear strategy and ambitious targets, we were able to navigate through many obstacles. This is a testament to the determination, vision and hard work of our staff, principals, stakeholders, service providers and the South African government.

The CDC does not operate in isolation and could not have achievedthesuccess,both inthe lastyearandoverthefive-year period, it has without the support and co-operation of many local, provincial and national government departments and other SOEs, for which I remain forever grateful.

Further, it is above all a team endeavour. I would like to thank all CDC employees for their dedication and contribution to our business performance. I would also like to thank our supervisory bodies for their extremely valuable advice, oversight, support and guidance.

We are well on track for the next five-year period. I haveconfidenceintheleadershipoftheorganisationwhichcontinuesto work hard to make the Coega IDZ and the CDC as a development agency, a success in terms of alleviating poverty, inequalities, and reduce unemployment – in spite of, and indeed because of, the challenges facing South Africa. We will continue relentlessly to implement our new strategy which takes a dense and complex view of development for both the province and SouthAfrica, focussingon financial self-sustainability, businessintelligence and strategic partnerships.

Dr Paul JourdanChairman

Mninawe (Pepi) SilingaCEO

Bongeka Jojo ChiefFinancialOfficer

29 July 2015

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ENERGY DEVELOPMENT: MEC of Economic Development, Environmental Affairs & Tourism, Sakhumzi Somyo, during an interview with SABC in 2015 at the DEDISA Peaking Power Plant.

The Integrated Report 2014/15 was approved for release by the Board and signed on its behalf by:

……………………………… ……………………………… ………………………………


ABOUT COEGA

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The Coega Development Corporation (CDC) is a state-owned company (SOC) mandated to develop and operate the 11 500 ha Coega Industrial Development Zone (IDZ), established in 1999. The organisation’s vision is to be the leading catalyst for socio-economic growth in South Africa, and its mission to provide a competitive investment location supported by value-added business services that ultimately enable socio-economic development in the Eastern Cape and South Africa.

The CDC provides customised project solutions, efficiencythrough experience, and adheres to transparent practices.

The organisation has cemented the Eastern Cape as an attractive investment destination and has positioned itself as a key player in the socio-economic development of the country. The Coega IDZ continues to draw international interest and remains one of Southern Africa’s most successful IDZs. In the 16 years since inception, the Coega IDZ has matured to become one of the biggest drivers of job creation and development of the Eastern Cape economy.

TheCoegaIDZisspecificallydesignedalongtheclustermodel,linking related industries and their supply chains in close proximitytooneanother,tomaximiseefficiencyandminimiseturnaround times. The IDZ is demarcated into 14 zones and hosts the following clusters:

• Metals/Metallurgical;• Automotive;• Services;• Chemicals;• Agro-processing;

• Logistics;• Energy; and• Maritime.

TheCDCdiversified its product offering in 2008 to includethe 216 ha Nelson Mandela Bay Logistics Park (NMBLP) in Uitenhage. The NMBLP provides infrastructure and services to the automotive manufacturing industry. By providing integrated, centralised logistics services and infrastructure, the NMBLP assists manufacturers to reduce costs and improves suppliers’ competitiveness.

The CDC company structure is divided into three main areas of focus:

• The Coega IDZ – currently hosting 31 operational investors with a combined investment value in excess of R6.44-billion;

• Coega Commercial Services – including recruitment, training and staff development services for investors in the IDZ through Coega Human Capital Solutions (HCS); leisure and business travel-related solutions through Coega Corporate Travel (CCT); business consulting services providing turnkey solutions through Coega Business Solutions (CBS); ICT services by Coega Telecom; and accommodation and conferencing through the Vulindlela Accommodation and Conference Centre; and

• Project Management Services – where CDC acts as implementing agent for a range of public and private sector clients, providing infrastructure development and facilities management services.

COEGA IDZ INfRASTRUCTURE

• 350 MW peaking power plant• 41 km of roads• 37 km of stormwater piping• 40 km of sewer lines with 5 pump stations• 38 km potable water piping• 178 km service ducts (telecoms)• 184 km electrical cable• 1138 street lights• 83 x medium voltage electrical substations• 5 x 132 KV main substations

2014/15 ACHIEVEmENTS

• Infrastructure Development and Top Performing Public Service awards;

• Job Creation Award at the 13th Annual Oliver Empowerment Awards;

• The CDC made investment history signing 19 clients duringthe2014/15FY-themosteverinafinancialyearat Coega IDZ;

• Winner of prestigious 12th Annual National Business Awards (NBA); and

• Head of marketing and communications, Dr Ayanda Vilakazi, was named the country’s 2014/15 Top Executive of the Year (under forty years).

fAST fACTS

• Biggest IDZ in SA at 11 500 HA• 14 zONES built along a cluster model• 6 443 HA of prime lettable industrial space• Within 15 MINUTES of road, rail, air and sea• 20 MINUTE drive to PE CBD main substations• Auto, renewables, BPO and agro-processing hub• 30 MINUTE drive to biggest wind energy generating farm• 62 142 jobs created since inception in 1999• 85 886 people trained• 31 operational investors• Access to 3 ports (PE, Ngqura and East London)• Huge logistics zone connected seamlessly with port• Direct linkage with deep water Port of Ngqura, the fastest

growing port in South Africa

564 smiling faces at CDC ready to make your investment dreams a reality.

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COEGA IDZ’S VALUE PROPOSITIONS

The Coega IDZ is positioned to support global competitiveness through world-class infrastructure, tax incentives, rebates and a duty-free zone. The IDZ is purpose-built for manufacturing includingbeneficiationof export goods, investment and localsocio-economic growth, including skills development and job creation.

The IDZ offers a comprehensive and attractive value proposition to investors:

• World-class infrastructure – Strategic location at the crossroads of global east-west and African trade routes; presence of world’s major shipping and logistics companies; adjacent to the modern, deep-water Port of Ngqura with container, bulk and break-bulk terminals as well as the Port of Port Elizabeth 20km away;

• Quick availability – Availability of land customised for heavy, medium and light industries, serviced sites and fast-track construction of factories, warehouses and officecomplexes on 11 500 ha of land;

• Special Customs Controlled Area (CCA) – Zones 1 and 2 have been designed as CCAs to comply with SARS requirements;

• Clustering for synergy and supply chain integration; • Back-of-port area supporting port-IDZ integration,

clustered to support the maritime and freight industries as a general logistics hub with facilities for abnormal load storage and an import laydown area;

• Facilitation of access to government incentives (local, provincial and national);

• Facilities for skills development (with personnel to provide customised solutions);

• “Plug and play” approach cuts out long construction periods and connectivity challenges;

• Purpose-built service points throughout the IDZ offer tenants prepared land linked to roads, electricity, sewerage, water and telecommunications;

• Marketing and other value-added services;• ICT services base infrastructure – infrastructure which

allows for the connectivity of voice/data/internet and video services up to the tenant premise edge; and

• Support with Safety, Health, Environment and Quality services, for example environment impact assessment processes.

PRODUCT OFFERING - REVENUE GENERATING

IDZ Focus Industrial Estate Development• Economic Infrastructure• Investment Attraction • Facilities Management

IDZ and Non-IDZ Focus

Travel Agency Services• Travel & Accommodation• VISA Applications • Conference Facilities

Skills Development Services• Accredited Training• Non-accredited Training• Conference Facilities

Non-IDZ Focus

Implementing Agency Services• Social Infrastructure• Facilities Management• Enterprise Development

Management Consultancy Services

• Research• Document Management Services• SEZ/IDZ Studies & Planning• Business Re-engineering

ADM

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TRAT

ION


MOTHER BRAND

BRAND VALUES & PILLARS

Positioning

Brand Values•Integrity•Innovation•Partnership•ServiceExcellence•Sustainability

The Coega brand strategy is based on a monolithic brand approach. The mother brand is Coega and pay-off line is Right Place, Right Time, Right Choice. There are three main brands, namely: IDZ, Commercial Services, and Project Management Services (External Programmes). The Coega sub-brands are as follows: NMLP, Vulindlela Accommodation & Conference Centre, Corporate Travel, Human Capital Solutions, Business Solutions, Telecoms, Infrastructure Development, and Facilities Management.

Brand Pillars• TransparentPractices• CustomisedSolutions• Efficiencythrough Expertise• SustainableSocio- Economic Development

Right Place, Right Time, Right Choice

MAIN BRANDSIndustrial Development Zone Commercial Services Project Management Services

SUB-BRANDS

Brand Personality• Progressive• Trustworthy• Intelligent

COEGA BRAND TREE

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COEGA IDZ: The entrance to the laydown area and Transnet National Ports Authority in Zone 1 of the Coega IDZ. The CDC established a 12 hectare laydown area which is being used as a temporary storage site for wind turbines and other abnormal cargo. Zones 1 and 2 have been designed as Customs Control Areas (CCA) to comply with SARS requirements.

Infrastructure Development


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COEGA TImELINE

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• The CDC signs Universal Wind to the Coega IDZ at avalueofR850-million;

• The CDC signs Hella Automotive to the NMBLP;

• The CDC signs Ulrica and Associates as an NMBLP investor;

• Coega Dairy (agro-processing) signs a lease agreement to establish a fully-fledgeddairyinzone3 of the Coega IDZ to the value of R125-million;

• Discovery Health signs a lease to establish a R15-million call centre in the Coega IDZ BPO Park; and

• Kuehne & Nagel (logistics)signs with the CDC for a R5-million investment.

2010 2011 2012 2013 2014 2015

• PresidentJacobZumaofficiallyopensthe Port of Ngqura;

• The Port of Ngqura surpasses the Port Elizabeth Port as the third busiest container port in South Africa;

• Chinese automotive giant, First Automotive Works or FAW signs a lease agreement to establish a truck assembly plant in zone 2 of the Coega IDZ with an investment value of R600-million;

• DCD signs agreement with CDC to establish a wind tower manufacturing plant in zone 3 of the Coega IDZ to the value of R300-million;

• The CDC signs Coega Dairy, GDF Suez and the National Tooling Initiative Program as investors in the Coega IDZ;

• The CDC signs 4PL. Com Logistics and Kuehne & Nagel as investors at the NMBLP;

• Term sheets are signed with EAB (renewable energy), Tyre Energy Extraction (logistics), OSHO Cement (metals), and Newco Cheese Factory (agro-processing);

• CDC reaches a Broad-Based Black Economic Empowerment (B-BBEE) level 2; and

• India-SA consortium Agni Steels starts construction of its R400-million steel billet manufacturing plant.

• CDC signs industrial gas company Air Products in December for R300-million investment;

• AfriSam signs lease for establishment of a top cement plant to the value of R634-million;

• Famous Brands signs lease agreement for the establishment of a R25-million cold storage distribution unit and partners with neighbouring investor, Coega Dairy, to produce cheese for its fast food outlets across the Eastern Cape;

• A total of eight investors are signed including Golden Era (manufacturing), Grinrod (logistics), Royale Energy International (chemicals) and Vector Logistics (logistics);

• CDC generates highest level of self-generated revenue of R290.7-million since inception, mainly due to its work on external infrastructure projects across the Eastern Cape;

• CDC creates the highest number of jobs ever over this year at 13 569 jobs training 13 607 people;

• Chinese company Sinopec partners with PetroSA on a blue print and feasibility study for the proposed oilrefineryatCoegaIDZ,dubbedProject Mthombo; and

• Discovery’s BPO call centre breaks the mark of 450 people employed.

• DCD Wind Towers begins construction on its zone 3 wind tower manufacturing plant in March; Air Products South Africa begins construction on its air separationunitinMay,thefirstinthe Eastern Cape;

• CDC wins Top Performing Parastatal/Agency of the Year at National Business Awards in November;

• CDC wins Best Provider of Services to Exporters in the Eastern Cape Award from the EC Exporters Club;

• CDC wins the Best Company in Promoting and Enhancing Sustainable Development in the Eastern Cape in 2013;

• Afrox, a leading South African gas company, is signed as a new investor in November;

• Coega Cheese starts producing thousands of tons of cheese a month for Famous Brands;

• Construction of FAW’s truck assembly plant is completed;

• Famous Brands starts operating from zone 1 of the Coega IDZ; and

• AgniSteelsfiresupitsmachinesto start producing steel billets.

• CDC’s pipeline is valued at R140-billion (private sector investments only in terms of capital expenditure with no revenues accruing to the CDC);

• Afrox starts construction of its air separation unit in zone 3 of the IDZ in February;

• FAW, DCD Wind Towers and Agni Steels SA reach commissioning phase and start production in March;

• First wind turbine tube rolls off the DCD Wind Towers production line in March;

• Operational investors increased from22to28in2014;

• Afrox and Air Products launch their air separation units;

• CDC signs record number of ten new investors;

• CDC awarded Top Employers South Africa 2014-2015 Award;

• CDC awarded Best Provider of Services to Exporters 2014; and

• CDC, in partnership with JA Solar,initiatesa48KWsolarpanel project to assist electricity generation within the IDZ, initially supplying power to the CDC headquarters.

• CDCnominatedforfinalistin the Top Empowered Public Service Award category at 14th Annual Oliver Empowerment Awards;

• CDC appointed implementing agent on behalf of KwaZulu-Natal Co-operative Governance and Traditional Affairs (COGTA) on two projects;

• UTi moves into a new IDZ facility;

• Air Products becomes operational;

• Afrox becomes operational;• 31 operating investors

with an investment value in excess of R6.44-billion; and

• 19 new investors signed in the Coega IDZ valued at R1.889-billion.


2014/2015 HIGHLIGHTS

2014/15 FYPerformance Measures Performance Target Actual Performance % Achievement

Revenue Generated R407.6-million R441.8-million 108%

Number of New Investments Attracted 11 19 172%

Value of Investment Signed R1.632-billion R1.889-billion 116%

VerifiedNumberofJobsCreated 14588 14 765 101%

Number of People Trained 5 595 8147 145%

Increased SMME Share of Overall Procurement 35% 46.17% 131%

LevelinAnnualAccreditationB-BBEECertificate Level 1 Level 1 100%

No of Successful Drivers 903 1 249 138%

LOOkING AHEAD

The achievement of the 2014/15 FY performance targets marks the end of the CDC’s 5-year strategic planning cycle, with the strategyrefinedandnewtargetssetfortheperiod2015–2020.

Perspective Objective Measures Targets

Developmental

Promote Small Medium and Micro Enterprise (SMME) Development

1) SMME Targeting1) 40% of all Procurement Spend

Improve contribution to EC GGP

1) GGP Contribution 1) 1.0%

Increase Job Creation1) Construction Jobs2) Operational Jobs

1) 46 0002) 13 477

Improve Skills Development1)CertifiedSkillsAttainment Number of People Non-certifiedTraining

1) Aggregate 95% Attainment of Targeted Skills Categories

Financial

Increase Alternative Funding Sources

1) Alternative Funding Ratio (non dti)2) Notional Value of Programmes/Goodwill Work

1)80%ofCapex Requirement2)5%ofProfit/R3-million

Achieve Independence from Government Funding

1)Profitability2) Revenue3) Revenue from Programmes

1) R336-million2) R1.4-billion3) R1.1-billion

Customer and StakeholderAttainDiversificationofCustomers and/or Products

1) New Investment Index2) Number of Investors Cumulative

1) Internal Target2) 92 Investors

Customer and StakeholderIncrease Growth of Operational Tenants

1) Operational Investor Index (Cumulative)

1)98OperationalInvestors or Equivalent Clients

Internal ProcessPromote Excellence in the Delivery of Projects at the CDC

1) Project Maturity 1) Level 4 Maturity

Organisational Capacity

Improve Business Processes and Systems

1)Attainmentofidentified ISO Requirements

1)100%ISOCertification

Optimise Staff Skills Inventory

1) Skills Targeting Index 1) Aggregate 5% Skills Gap

2014/15 fINANCIAL PERfORmANCE

Self-generated revenue

Rentals received and project management fees contribute to CDC’s self-generated revenue over and above government grants.

Actual 2013/14 Target 2014/15 FY Actual 2014/15 FY% achievement

R’000 R’000 R’000

R383500 R407 600 R441800 108%

Grants vs self-generated revenue

2013/14 FY 2014/15 FYR’000 R’000

Self-generated R383500 R441800

Government Grants R351 576 R347857

Expenditure

2013/14 FY 2014/15 FYR’000 R’000

Expensed R582737 R611 630

Capitalised Assets R448798 R198791

TOTAL R1 031 535 R810 421

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AUDITED PERfORmANCE RESULTS fOR THE 2014/15 fy

18 19

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The Coega IDZ was envisioned as a project to transform the socio-economic landscape of the Eastern Cape, addressing the triple challenges of unemployment, poverty and inequality by attracting foreign and local investment. Socio-economic performance measures are as important as the provision of an attractive investment destination and value-added services in determining the success of CDC in meeting its strategic goals.

By securing investments with a value of over R1.8-billion in2014/2015, the CDC made a significant contribution toaddressing these triple challenges. The new investors signed in 2014/15 FY together contribute 5 240 new direct jobs, and 2 530 indirect jobs to the local economy.

The performance highlights below, aligned to the CDC’s strategic objectives, illustrate the corporation’s contribution to human capital and small business development, broad-based black economic empowerment, corporate social investment and infrastructure development.

Job Creation

• In the period under review, CDC supported the South African economy and created 14 765 direct jobs – achieving101%ofthetargetof14588;

• New investments into the IDZ secured in 2014/15 FY contributed 7 770 new direct and indirect jobs.

Human Capital Development

• In theperiodunder review, 8147 individualsbenefitedfrom training programmes undertaken by CDC’s Human Capital Solutions, achieving 145% of the annual target of 5 595;

• During the 2014/15 FY, CDC enrolled 185 interns ininternship programmes, 166 in the Eastern Cape and 19 in KwaZulu-Natal,ofwhich68werepermanentlyappointed,against a target of 46.

Corporate Social Investment (CSI)

• In the period under review, CDC invested in excess of R37-million in local and regional community projects, a significant share of its contribution of over R95-million

sinceinception,whichhasbenefitedthousandsofpeoplein the Eastern Cape;

• The CDC Driver Training Programme invested more than R8-million in new training simulators and vehicles, andtrained1249drivers,achieving138%ofitstargetof903new drivers.

Infrastructure Development Programmes

• The External Programmes business unit grew its infrastructure development projects for provincial and national government departments from eight to 12 in the year under review, securing two national government department clients and further extending the CDC’s footprint in KwaZulu-Natal;

• The CDC was involved in infrastructure development projectstogethervaluedatmorethanR2.8-billion;

• Nationally, the CDC was involved in construction and/or rehabilitation of more than 600 schools, creating a positive impact on teaching and learning for more than 100 000 children;

• Three major health centre projects in the Free State Province brought access to public health facilities to 500 000 people, when they were commissioned during the year under review.

SMME Procurement

• The CDC procured 46.17% of its goods and services from SMMEs in 2014/15 FY, achieving 131% of its set target of 35%.

Accreditations/certification

• Demonstrating its performance against global standards and benchmarks,theCDCachievedthreenewcertificationsintheyearunderreview:ISO15489(RecordsManagement),ISO 31000 (Risk Management) and SANS 16001 (Wellness & Disease Management, incl. HIV and TB);

• TheCDCagainachievedB-BBEELevel1certification,andqualifiedasavalue-addingsupplier;

• The organisation won nine awards for its performance in strategically important areas including environmental sustainability, empowerment and job creation.

INVESTmENT PERfORmANCE

• Continuing the momentum achieved with its entry into double digits for new signed investors in 2013/14 FY, the CDC broke new records and signed up 19 new investors in 2014/15 FY;

• ThetotalvalueofinvestmentssecuredfortheCoegaIDZin2014/15FYwasR1.889-billion.

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# Investor Zone SectorCountry of

OriginInvestment Value Job creation

R’000 Direct Indirect1 Nollen Group 5 Agro-processing SA R 40 000 133 2 000

2 Corro Master 3Light

ManufacturingSA R 90 000 150 250

3 MSC 1 Logistics Italy R 50 000 65 100

4 Kenako Concrete 5 Metals SA R78000 155

5 NeOn Energy 2Renewable

Energy Italy R72800 95

6TDS (Rolling Mill)

5 Metals SA R353800 355

7 MM Engineering 5 Metals Turkey/SA R 350 000 475

8AGNI Rolling Mill (Expansion)

5 Metals India/SA R 425 000 412

9Coega Dairy(Expansion)

3 Agro-processing SA R 4 497 54 16

10Coega Cheese(Expansion)

3 Agro-processing SA R 20 700 216 64

11 Lension JV 7 Chemicals Malaysia R 16 500 80

12 REDISA 1 Automotive SA R 41 000 160

13 Spiral Wrap 5 Chemicals SA R19873 20

14Rehau (Expansion)

NMBLP Automotive Germany R 165 000 370

15Q-Plas (Expansion)

NMBLP Automotive Germany R 110 000 2 000

16 River Edge 3 Agro-processing SA R 9 960 25

17 Ya-Lapa 3 Agro-processing SA R 10 000 25 100

18 CAPITA 4 BPO SA R 12 700 150

19Discovery (Expansion)

4 BPO SA R 20 100 300

TOTALS R 1 889 930 5 240 2 5307 770

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Once the infrastructure of the IDZ was completed, the CDC began applying its project management expertise in the facilitation and fast-tracking of government infrastructure projects. This has seen the CDC extend its impact within the broader Eastern Cape, and more recently in KwaZulu-Natal, Gauteng and the Free State.

The diagram below indicates the evolution of the CDC’s business model with the addition of project management services outside of the IDZ:

TheIDZis investorspecific; investorsalsomakeuseoftheexternalservicesonoffer. Theseexternalservicesarecomprisedof individual business units originally intended to support the investors of the IDZ, but which now operate with a core focus to generate their own revenue through their servicing of private business and government investor entities.

Project Management Services is targeted to cater to the project management needs of large infrastructure developments, currently servicing government projects and IDZ investors, but can potentially service private industry infrastructure developments as well.

The CDC’s business model has evolved over time from mainly investment attraction to selling project management and strategic services to a broader range of clients. This evolution came about through the implementation of the CDC’s five-year rolling strategy, ending in the year under review, which saw a shift in the CDC’s core business from IDZ developer and operator, to catalyst for socio-economic development throughout the Eastern Cape and beyond.

This shift in strategy reflects the CDC’s mindset as adevelopmental organisation and was also necessitated by the continued and substantial reductions in government grant funding, which greatly challenged the business model of the CDC.

As a result, over the past few years the CDC has proactively developed external consultancy businesses and provincial and national Infrastructure Implementation Programmes, evolving the capabilities that it had built internally and further converting

them into a product line/value offering that will grow the business of the organisation and diversify its income base.

These external consultancy businesses and programmes have driven a consistent increase in self-generated revenue for the CDC, growing at an average of 36% year-on-year over the past five-year strategy implementationperiod,constituting64%ofthe total revenue in the year under review.

Business Model Evolution

The CDC‘s initial core target market was potential investors. Once an investor was secured, income would be generated from their rental of the land and infrastructure, and through their use of value-added services. The result was a direct impact on the Eastern Cape economy in terms of foreign direct investment and job creation.

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BUSINESS MODEL – HOW CDC CREATES VALUE

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INVESTMENT PROMOTION

COEGA DEVELOPMENT CORPORATION

DIVERSIFIED BUSINESS:PROJECT

MANAGEMENT

Infrastructure Development Services

Project Management ServicesCommercial Services

Coega Human Capital Solutions

Facilities Management Services

Coega Strategic Solutions (Business Consulting)

Coega Telecoms

Coega Corporate Travel

Coega Vulindlela Accommodation & Conference Centre

IDZ

NMB Logistics Park

DRIVING HEALTHCARE: CDC hosted Health MEC Sicelo Gqobana (second from left) at the sod turning of the Vaalbank Clinic in Chris Hani District.


INPUTS (CAPITAL)

FINANCIAL CAPITAL:

• Capital & reserves: r4.3-billion; and• Total equity & liabilities: r5.6-billion.

MANUFACTURED CAPITAL:

• Total assets: r5.6-billion;• Property, plant & equipment: r282-million;• Investment properties: r4.7-billion;• IDZ: 6 443 ha of lettable back of port, industrial space; and• NMBLP: 216 ha logistics park for the automotive industry.

IDZ INFRASTRUCTURE:

• 350 mW peaking power plant;• 41 km of roads;• 37 km of stormwater piping;• 40 km of sewer lines, 5 pump stations;• 38 km of potable water piping;• 178 km of service ducts (telecoms);• 184 km of electrical cable;• 1 138 street lights;• 83 x medium voltage electrical substations; and• 5 x 132 kV main substations.

INTELLECTUAL CAPITAL:

• Infrastructure development & project management expertisefromdevelopingandoperatingSA’sfirstandlargest IDZ;

• Proprietary knowledge and systems in project management; and

• Accumulated IA expertise.

HUMAN CAPITAL:

• 564 employees

KEy SUPPORT PROCESSES

• Human resource development;• Legalandfinancial;• Asset and facilities management;• Customs, logistics & security;• Safety, Health, Environment & Quality (SHEQ); and• ICT, Research & Strategy.

KEy BUSINESS PROCESSES

• Investment promotion;• Infrastructure development;• Investor support; and• Project management.

SOCIAL & RELATIONSHIP CAPITAL:

Effective stakeholder engagement and management of relationships with – • Government as funder/primary shareholder;• Government and public sector agencies as clients;• Investors and tenants;• Prospective investors;• Infrastructure development clients;• External services clients;• Employees;• Local communities; and• Civil society – organised business, labour, political

organisations.

NATURAL CAPITAL:

• 11 500 ha IDZ;• Producer of power through solar and wind;• Water, air, ecosystems and biodiversity; and• Green and blue economies.

The CDC creates value for investors, clients and stakeholders through its provision of a competitive investment location supported by value-added business services, resulting in the organisation achieving its mission to act as an enabler of sustainable socio-economic development.

Currently, the Coega IDZ contributes an estimated 5.9% to the provincial gross domestic product (GDP) and 0.5% to the national GDP,afiguretheCDCwillseeincreaseinthenearfutureastheorganisation’stractionbothwithintheIDZandtheprovincegrows with investment and projects advancement. TH

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OUTCOMESENABLING SUSTAINABLE SOCIO-ECONOmIC DEVELOPmENT

ECONOMIC DIVIDENDS 2014/15 FY:

• 19 new investors signed;• r1.889-billion investment value;• Revenue r441.8-million;• 46.17% SMME procurement;• 14 765 jobs created; and• 5 240 new direct jobs, and 2 530 indirect jobs.

SOCIAL DIVIDENDS 2014/15 FY:

• 8 147 people trained;• B-BBEE level 1certification;• r37-million CSI spend;• 1 249 drivers trained;• Management of provincial and national government

infrastructure projects, together, valued at more than r2.8-billion;

• Access to education and public health

ENVIRONMENTAL DIVIDENDS 2014/15 FY:

• ISO&SANScertificationsachieved;• Air Quality Management Programme;• Open Space Management Plan (OSMP); and• Environmental Rehabilitation Programme.

REST OF AFRICA

Population:807.5million

GDP:US$ 546.5 billion

Export:US$ 36.9 billion

Import:US$ 50.0 billion

BRAzIL

Population:200.4 million

GDP:US$ 1.2 trillion



SADC



Export:US$108.0billion


SOUTH AFRICA

Population:53 million


CHINA

Population:1.4 billion




INDIAPopulation:1.3 billion


Export:US$28.0billion


Trade map of South African imports & exports with SADC, the rest of Africa and the world.VALUE CREATION

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RUSSIA






INfRASTRUCTURE VALUE CREATION

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TheCDC’sroleasimplementingagentonnationalandprovincialgovernmentinfrastructureprojectsismakingasignificantimpactthrough its service delivery in education and health to communities throughout South Africa. In 2014/15 FY these achievements included:

FREE STATEClient: National Department of Health.Projects: 3 major health centres.Impacting on:Borwa next to Thabanchu: ±23 000 people;Clocolan: ±50 000 people;Qwaqwa: ±70 000 people; and Dehlabeng: ±360 000 people.

GAUTENGClient: National Department of Health.Project: 1 major hospital.

Client: National Department of Public Works.Projects: Prestige Projects Rehabilitation Programme: Union Buildings and Pretoria ministerial complex.

EASTERN CAPEClient: National Department of Basic Education.Projects: 26 schools.Value: R451-million.Impacting on: 6 040 learners.

Client: EC Department of Human Settlements.Projects: Rehabilitation of 1 451 RDP houses (496Molteno,77EastLondon,878NMB).Impacting on: ±8700people.

Client: EC Provincial Treasury & DEDEAT.Project: NMB sanitation – 2 000 slabs and toilets.Value: R100-million.Impacting on: ± 12 000 people.

Client: EC Department of Education.Project: Building/rehabilitation of 71 schools, predominantly rural.Value: R1-billion.Impacting on:48828learners.

Client: EC Department of Health.Projects: Facilities management of more than 1 400 health facilities.Value: R2-billion.Impacting on: ± 4.5 million people.

Client: EC Department of Health.Projects: Planning and commissioning of new capital works, incl. Cecilia Makiwane Hospital and NHI in Mthatha.Value: R1.4-billion

Client: EC Department of Sport, Recreation, Arts & Culture (DSRAC).Projects: 5 libraries, 2 museums, 1 swimming pool. Value: R92-million

Client: EC Department of Roads and Public Works.Project: Roads Enterprise Development Programme (REDP).Value: R57.8-million.Impacting on: ± 2.5 million road users.

KWAzULU-NATALClient: National Department of Basic Education.Projects:81schools.Value: R20-million.Impacting on: 11 200 learners.

Client: KZN Department of Education.Projects: 442 schools.Value: R479-million.Impacting on:38480learners.

Client: KZN Department of Cooperative Governance& Traditional Affairs. Projects: 39 solar installations for houses belongingto Royal Households and Community Centres.Value: R23-million.

Client: KZN Department of Social Development. Projects: 10 Early Childhood Development Centres.Value: R45-million

WESTERN CAPEClient: National Department of Public Works.Projects: Facilities Management of Robben Island World Heritage Site; andPrestige Projects Rehabilitation Programme: Cape Town parliamentary village.

Client: WC Provincial Government.Infrastructureprogrammesolutioncurrentlybeingfinalised.

MPUMALANGAClient: Mpumalanga Provincial Government.Infrastructureprogrammesolutioncurrentlybeingfinalised.

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DIGNIFIED HEALTHCARE: CDC has been appointed as implementing agent and is hard at work with the upgrade of the Frere Hospital.


AREA PROfILEORGANISATIONAL OVERVIEW & BUSINESS mODEL

CHIEf EXECUTIVE OffICER

mR PEPI SILINGA

CENTRAL SUPPORT

SERVICES

SEZ INVESTMENT

SERVICES

INVESTmENT PROmOTIONS

(BUSINESS DEVELOPmENT):

MR CHRISTOPHER MASHIGO

IDZ INfRASTRUCTURE

PROGRAmmE:

MS MARIA VAN ZYL

ENTERPRISE

DEVELOPmENT UNIT:

DR MPUMI MABULA (Acting)

BUSINESS DEVELOPmENT

EXTERNAL PROJECTS:

MR CHUMA MBANDE

CORPORATE SERVICES:

ADV ZUKO MAPOMA

kZN PROGRAmmE:

MR ZAKHELE KUNENE

OPERATIONS:

MR THEMBA KOZA

ICT, RESEARCH AND STRATEGy:

MR MONDE MAWASHA

CENTRE Of EXCELLENCE:

DR MPUMI MABULA

PROVINCIAL TREASURy

INfRASTRUCTURE PROGRAmmE:

MR ZUKO MQATHU

DEPARTmENT Of EDUCATION DEPT Of SPORT, RECREATION, ARTS AND CULTURE:MS THEMBEKA POSWA

PROGRAmmE DIRECTOR: WILD

COAST SEZ PROGRAmmE:

MR THANDO GWINTSA

DEPARTmENT Of HEALTH

fACILITIES mANAGEmENT:

MR DAVID LEfUTSO


INfRASTRUCTURE:

MR HENNIE VAN DER KOLf (Acting)


PLANNING & COmmISSIONING:

MS PUSETSO MABETOA

EXTERNAL SERVICES

COST ENGINEERING UNIT:

MR HENNIE VAN DER KOLf

fINANCE:

MS BONGEKA JOJO

ORGANISATIONAL OVERVIEW – WHO WE ARE, WHAT WE DO

Duringthepasttwofinancialyears,theCDCundertookorganisationalrestructuringtostreamlineitsoperationstomeetgrowinginternalandexternaldemands.TheresultisthediversificationoftheCDC’sbusinessandtheallocationofhumanresources to further capacitate the organisation through Programme Directors for the infrastructure development business of the organisation in the following areas:

• SEZ Investment Services;• Central Support Services; and • External Services.

These divisions and the new organisational structure are further outlined in the organogram below.

INTERNAL AUDIT

mS LUmkA PANI

SHARED SERVICES UNIT

DR SIYABONGA SIMAYI

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GLOBAL fOOTPRINT

INDIA & SE ASIA

ServicesMetals AutomotiveChemicalsEnergy

EU

PetrochemicalsMetalsEnergy

EU

AutomotiveAgro-processingChemicalsMetals Energy

EU

ServicesAutomotiveMetalsEnergy

EU

ServicesAutomotiveMetalsEnergy

SADC

Export-orientedManufacturingServicesHeavy Industry

LogisticsAgro-processingChemicals & Allied Industries

AUSTRALASIA

AutomotiveGeneral ManufacturingCapitalEquipment

RNRF

DIGITAL LOGISTICS

PE COLD STORAGE (PTY) LTD

USA/CANADA/ MEXICO

AutomotiveServices ChemicalsMetals

FAR EAST

ElectrotechnicalAutomotiveMetalsEquipment & Machinery

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5

3

14

9

4

2

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8

12

11

6

10

7

AREA PROfILE

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zONE 2

Automotive Cluster – FAW, UTi

zONE 1N

Commercial Cluster – Coega Business Centre

zONE 1S

Logistics Cluster – Digistics, Famous Brands, APM Terminals, PE Cold Storage, General Motors South Africa, Vector Logistics

zONE 3

General Industries Cluster – Afrox, Powerway, Air Products, Dynamic Commodities, Coega Dairy, Coega Cheese, DCD Wind Tower

zONE 12

Advanced Manufacturing Cluster

zONE 13

Energy Cluster – Dedisa substation and peaking plant under construction

zONE 4

Training & Academic Cluster – Human Capital Solutions, Skills Development Centre, BPO Park: Discovery, Small Business Finance & Support

zONE 5

Metallurgical Cluster – Bosun Brick

zONE 7

Chemicals Cluster – Cerebos

zONE 6

Ferrous Metals Cluster – Agni Steels SA, Electrawinds

zONE 8

Port Area

zONE 9

Materials Handling Cluster

zONE 10

Mariculture & Aquaculture Cluster

zONE 11

Petrochemical Cluster

zONE 14

Advanced Manufacturing: Aeronautical & Aerospace Cluster

NMBLP

Nelson Mandela Bay Logistics Park – MSC, Grupo Antolin, Benteler, Inergy, Rehau, Faurecia, Hella

13


OWNERSHIP & CONTROL

SPECIAL ECONOMIC ZONES ACT (2014) | The Act provides for the designation of the following types of SEZs:

The CDC is a government-owned entity mandated to develop and operate the 11 500 ha Coega IDZ, adjacent to the deep-water Port of Ngqura, which is owned by the Transnet National Ports Authority (TNPA). The Department of Trade and Industry (dti) is the primary shareholder and executive authority, with ordinary shares owned by the Eastern Cape Provincial Government through the Eastern Cape Development Corporation.

Free Ports Free Trade Zones Industrial Development Zone

Sector Development/Specialised Zones

Duty free areas adjacent to a port of entry where imported goods may be unloaded for value-adding activities, repackaging, storage and subsequent re-export, subject to special customs procedures.

A duty free area offering storage and distribution facilities for value-adding activities within the Special Economic Zone.

A purpose built industrial estate that leverages domestic and foreign fixeddirect investment in value-added and export-oriented manufacturing industries and services.

A zone focused on the development of a specificsector or industry through the facilitation of general or specific industrialinfrastructure, incentives, technical and business services primarily for the export market.

MinisterDr Rob Davies

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A SHINING LIGHT: TheCDCheadoffice,inZone1oftheCDCIDZ.

REPUBLIC OF SOUTH AFRICAMEC of DEDEATMr Sakhumzi Somyo


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STAkEHOLDERS

Stakeholdersareallthoseindividuals,groupsorinstitutionswhichaffectorinfluence–orareaffectedbyorimpactedupon–theCDC’s operations, services, products or performance. As an agent of socio-economic transformation and development, the CDC relies on a complex network of stakeholders for its success in achieving its mission and strategic goals. At the same time, the organisation takes comprehensive measures to maintain consistent mindfulness of its impact on stakeholders – in terms of job creation, skills development, economic empowerment and improved quality of life – manifested through its activities in investment promotion, infrastructure projects and community development.

The organisation views positive stakeholder relationships as being founded on acknowledgement of these mutual needs and interests, and strives to maintain open, two-way communication and effective, strategic relationship management.

Through effective stakeholder management, the CDC aims to:

• Ensure positive internal customer relations through service provision and support;

• Establish and maintain good corporate governance;• Ensure proper risk management within the organisation;• Contribute to skills development in the Eastern Cape;• Attract foreign and local investment to the IDZ with a view

to establishing a stable base of manufacturing investments; and

• Create jobs through infrastructure development and investment in the IDZ.

The CDC’s comprehensive Stakeholder Management Plan is founded on the outcomes of customer and stakeholder satisfaction surveys conducted across all business units.

The key objectives of the plan are to:

• Create a coherent guiding document that outlines and definesthepathtowardsbetterstakeholderengagementand that builds relationship capital;

• Identify and engage all stakeholders;• Develop robust relationships with stakeholders;• Create high reserves of reputational capital;• Contribute to sustainable business growth and sustainable

development of the CDC;• Lobby and communicate with important decision-makers and

stakeholders to facilitate buy-in and support for the CDC;• Keep decision-makers, role-players and stakeholders

consistently informed and abreast of CDC progress;• Establish a strategy and plan that adequately acknowledge

therole,influenceandimpactofstakeholders;• Ensure that the needs of stakeholders are taken into

account in order to improve stakeholder satisfaction through regular stakeholder surveys;

• Build capacity to engage with policy-making processes in the best interests of the CDC;

• Facilitate the development of a critical mass of supporting voices on matters relating to the CDC; and

• Establish an environment and conditions favourable for the successful implementation of the overarching goals of the CDC.

STAKEHOLDERS

Local Users

CDC Stakeholders

Regular Users

Other

Potential Users

Public Agencies Land Owners

Regular Users

Neighbours

Economic Interest Wilder Catchment User

Professional Interest

Civil Society Organisations

Other Businesses

Local Users

Potential Users

Industrial Development Related

Current Investors, CDC Staff

Local Community (Public)

Potential Investors, Potential Employees

Trade Unions, Political Organisations

Vulindlela Accommodation & Conference Centre, Business Solutions, Human Capital Solutions, Telecoms, Corporate Travel

NMBM, Despatch, Uitenhage, Sundays River

Special Residential School

Political Organisations (dti, DEDEAT), Trade Unions

DSRAC, DoE, NMBM, DoH, DSD, DRDLR NMBM

Potential Investors, Day Visitors

CDC STAkEHOLDER mAP

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INTERNATIONAL FAW DELEGATES: CDC Head of Marketing and Communications Dr Ayanda Vilakazi welcomed the Chinese automotive manufacturer First Automotive Works (FAW)delegatesaheadofthecompany’sofficiallaunchofitsR600-millionassemblyplantinZone2oftheCoegaIDZinJuly2014.


Stakeholders’areasofimpactandinfluencearecategorisedintermsof:

• Financial sustainability of the Coega IDZ;• Environmental impact of the Coega IDZ;• Regulatory/legislative impact;• Business opportunities;• Training and development, including SMME support;• Service delivery;• Job creation; and• Socio-economic development.

Keyplayersarethosestakeholderswhoselevelofinfluenceandinterestmakethemcriticaltothesuccessoftheproject,andtheyare the top priority in stakeholder engagement activities.

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Primary Key Players – External

Secondary StakeholdersPrimary Key Players –Internal

Department of Trade and Industry CDC Current and Potential Investors CDC Employees

Trade and Industry, Economic Development Parliamentary Portfolio Committees

Communities CDC Executive Management

National Treasury, EC Provincial Treasury, and Auditor-General

Other Non-core Government Agencies CDC Board of Directors

EC Provincial Government including the Office of the EC Premier and other provincial structures (DEDEA)

Media; andBusiness Community (Key Groups)

CDC Structures (OPSMA etc.)

The ruling party at National and Provincial Level

Business Groups (Sectoral Classification) including Developmental Finance Institutions

Nelson Mandela Bay MunicipalityEducation and Training Institutions (Local, Provincial and National)

Key Project Stakeholders- EC DRPW, KZN DoE, EC DoH

Political Parties excluding the ruling party in government;Key Sectorial Labour Federations;Youth Organisations – Local and Provincial;Lobby Groups and Think Tanks – Local and Provincial; andSuppliers

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MANDELA DAY: The CDC’s Corporate Social Investment (CSI) unit contributed towards Mandela Day. CDC, together with the Eastern Cape Department of Rural Development & Agrarian Reform, Food Bank South Africa and Ever Grow, worked hand in hand to assist the communities.


AREA PROfILEMATERIAL ISSUES RISkS & OPPORTUNITIES

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The CDC practices effective risk management as a critical componentofanefficientandfocusedbusinessenterprise,andas a responsible public entity bound by the PFMA and Treasury regulations.

The annual risk management plan gives effect to the risk management strategy and policy, taking into account:

• The risk management policy framework;• Available resources;• Changes within the organisation;• Urgency, quick wins and sustainability; and• Business continuity.

The CDC Board is accountable for the process of risk management and the effectiveness of the system of internal control and, in terms of responsible, proactive and sound risk management, ensures that:

• There is a formally defined riskmanagementpolicy andstrategy in place designed to ensure that risk management

practices are maintained at best practice levels; • There is an on-going process for identifying, evaluating and

managingthesignificantrisksfacedbytheCompanythathas been in place for the year under review; and

• There is an adequate system of internal control in place tomitigatesignificantrisks facedbytheCompanytoanacceptable level. Such a system is designed to manage, rather than eliminate, the risk of failure or to maximise opportunities to achieve business objectives.

InidentifyingtheCDC’soveralltop10risks,therisksidentifiedby the various Business Units and Programmes are analysed and ranked.

Risk registers and monitoring reports are prepared and updated on a monthly basis and reviewed by the Risk Management Committee.

No.ORGANISATIONAL OBJECTIVES

CATEGORY RISK

1 Preferred investment destination Environment and CommunityInability to attract investors due to political instability both at a National and Local Government level.

2 Preferred investment destination StrategicLoss of potential investors (to more attractive locations) due to the dti decision not to fund top structures.

3 Financial sustainability and growth Operations/Performance

Loss of life or severe damage to property due toaninabilitytoadequatelyrespondtofiresor other disaster scenarios resulting from the absence of an emergency centre within the IDZ.

4 Financial sustainability and growth Financial

Delays in signing SLA / Contracts with clients, which may result in the organisation not effectivelymanagingitsrevenueandprofitprojections.

5 Financial sustainability and growth FinancialIntheeventofafire:buildingswithoutoccupationcertificatesnotbeingunderwritten.

6 Preferred investment destination Operations/PerformanceLoss of potential investors due to inability of NMBM to provide bulk services.

7 Financial sustainability and growth Operations/PerformanceLoss of external services’ business due to competition with other implementing agents.

8 Service provider of choice Reputation/Public ImageNegative publicity due to delays in paying service providers.

9 Service provider of choice Reputation/Public ImageCollapse of client relations because of undue reliance on certain key personnel who might not be available at all times.

10 Service provider of choice StrategicUnattractive IDZ due to unconducive policy environment.

TOP 10 RISkS AND CATEGORIES

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MASSIVE STORAGE SITE: Linda Sityoshwana CDC’s Trade Solutions Project Manager, at the 12 hectare abnormal cargo storage site, located on the boundary between the Port of Ngqura and the Coega IDZ.

40 41

RISk mITIGATION

No. RISK ACTION PLAN DESCRIPTION

UPDATE ON MITIGATION ACTION

1

Collapse of client relationships due to undue reliance on certain key personnel who might not be available at all times.

• Ensure that there is always an alternative person who can engage the clients in all of the client facing programmes.

• An Accounts Manager for the Eastern Cape Portfolio has been posted to East London.

2

Delays in signing SLA/Contracts with clients, which may result in the organisation not effectively managing its revenueandprofitprojections.

• Develop a strategic approach to the closing of deals, involving the Executive Manager for Business Development (External Services).

• A standard template for contracts / contracts’ management has been developed to hasten the closure of deals between the CDC and its prospective clients.

3Intheeventofafire:buildingswithoutoccupationcertificatesnot being underwritten.

• Institute an interim arrangement with the NMBM’s Fire Chief.

• Cover the building as a site under construction until the one outstanding signature is in place.

• Theidentifiedactionshavebeenundertaken.Risk closed.

4Loss of potential investors due to inability of NMBM to provide bulk services.

• Constant engagement with NMBM to inform them of the CDC’s needs in advance and escalating challenges to next higher level of government.

• Continuous engagement with the NMBM undertaken.

5

Loss of life or severe damage to property resulting from inability to adequately respond tofiresorotherdisasterscenarios due to the lack of an emergency centre in the IDZ.

• Utilisation of local firestations in case of emergencies (Motherwell & Transnet).

• The organisation will determine the critical mass that would require the establishment of an emergency centre and request funding allocations.

• The submission for funding was submitted to the dti SEZ fund as planned.

6

Loss of External Services’ business due to competition with other implementing agents.

• Ensure that all programme human resources are trained to remain relevant, appropriately responsive and competitive.

• Maintain good relations with all the client departments.

• Project Managers are currently being given additional training to ensure that they acquire the necessary skills in order to remain relevant and competitive.

• A position for an Executive Manager in Business Development for infrastructure programmeshasbeencreatedandfilled.Theincumbent is charged with maintaining good relations with all client departments.

7Negative publicity due to delays in payments to service providers.

• Signing of SLAs to address the payment terms with client departments.

• Terms of payment are agreed upon in advance and a programme of debt collection has been established and implemented.

8

Inability to attract investors due to political instability both at a National and Local Government level.

• Full implementation of the following plans:

- PR Plan - Stakeholder - Relations Plan - Brand Plan, - Brand Measurement - AVE (advertising value equivalent) Measurement.

• Management has developed and is currently implementing the following plans:

- PR Plan - Stakeholder Relations Plan - Brand Positioning Strategy.• To improve its brand image, the CDC

subjects itself to stakeholder/public scrutiny resulting in the CDC winning numerous business awards (9 awards in 2014/15 FY).

9

Unattractive IDZ due to unconducive policy environment.

• Regularly engage with DEDEAT and the dti to tryandinfluencetherapidimplementation of a more effective incentive regime with the requisite funding allocations.

• Interaction with DEDEAT and the dti on the implementation of the SEZ Act is on-going.

10

Loss of potential investors (to more attractive locations) due to the dti decision not to fund top structures).

• Regular technical engagements with the dti to improve its understanding of the requirements for IDZ/SEZ attractiveness. Recently, some progress has been made with this but no funding has been allocated yet.

• The dti is now funding top structures. Risk closed.

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CORPORATE GOVERNANCE STATEmENT

Company Secretary and Professional Advice

All directors have access to the service of the Company Secretary, who is responsible for ensuring that Board procedures are followed. All directors are entitled to seek independent professional advice about the affairs of the Company and the Company’s expense.

Report of the Audit & Risk Committee

The Audit and Risk Committee (ARC) has adopted formal terms of reference, which have been approved by the Board. In meeting its responsibilities as set out in the terms of reference, the ARC has reviewed the following:

• The functionality of the Risk Management internal control system;

• The functioning of the internal audit department;• The risk areas of the entity’s operations to be covered in

the scope of the internal and external audits;• Financial information provided by management;• Theaccountingorauditingconcernsidentifiedasaresult

of the internal or external audits;• The entity’s compliance with legal and regulatory

provisions; and• The credibility, independence and objectivity of the

external auditors as well as their audit reports.

TheARC is satisfied that internal controls and systemshavebeen put in place and that these controls have generally functioned effectively during the period under review.

TheARChasevaluatedtheannualfinancialstatementsoftheCoega Development Corporation Proprietary Limited for the year ended 31 March 2015 and has concluded that they comply, in all material respects, with the requirements of the Companies Act (Act 61 of 1973, as amended) and International Financial Reporting Standards (IFRS).

The ARC has:

• Reviewed the credibility, independence and objectivity of the external auditors;

• Reviewedsignificantadjustmentsresultingfromtheaudit;• Reviewed the external audit report and audit opinion; and• Met with the external auditors to ensure that there are no

unresolved issues.

The ARC agrees that the adoption of the going concern premise isappropriateinpreparingtheannualfinancialstatements.

The ARC has therefore recommended the adoption of the annualfinancialstatementsbytheBoardofDirectors.

Ayanda MjekulaChairperson: Audit and Risk Committee

GOVERNANCE

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CDC CEO: Mninawe (Pepi) Silinga has been at the helm of the CDC for 16 years, providing insight, leadership and direction to one of South Africa’s leading SOEs.

44 45

ATTENDANCE SCHEDULE OF BOARD & SUB-COMMITTEE MEETINGS

2014/15 FY BOARD MEETING ATTENDANCE SCHEDULE

MEMBERS MEETING 29 JUL

MEETING 25 SEP

MEETING 04 DEC

MEETING 26 MAR

Mr J de Bruyn � � � �

Dr P Jourdan � � � �

Mr S Zikode Apology � Apology Apology

Mr S Liebenberg � � Apology �

Mr P Silinga � � � �

Mr P Ndoni � � � �

Adv T Norman � � � Apology

Cllr B Lobishe � � � �

Mr S Khan - - � Apology

2014/15 FY Audit & Risk Committee AtteNdANCe sCHeduLe

memBeRs meetiNG 18 JuL

meetiNG 04 seP

meetiNG 03 deC

meetiNG 12 mAR

meetiNG 24 mAR

Mr A Mjekula � � � � �

Mr J de Bruyn � � � � Apology

Mr S Liebenberg � � Apology Apology �

Mr T Zakuza � � � � �

Ms N Qangule � Apology � � �

Mr K Naidoo � � � � Apology

2014/15 FY HUMAN RESOURCES & REMUNERATION COMMITTEE ATTENDANCE SCHEDULE

MEMBERS MEETING 17 JUL

MEETING 04 SEP

MEETING 03 DEC

MEETING 12 MAR

Mr J de Bruyn � � � �

Dr P Jourdan � � � �

Mr P Silinga � � Apology �

GOVERNANCE STRUCTURE

Robust and effective governance is the cornerstone of the CDC’s continued success in value creation – providing both investors and stakeholders with the assurance of stability and sustainability.

The CDC Board provides the organisation’s vision and strategic direction,playinganactiveroleindefiningandmonitoringtheorganisation’s annual performance objectives and targets, which maptheroadtowardsachievementofthefive-yearstrategy.TheBoard meets quarterly to review progress against performance objectives and to consider material issues in the context of the external environment and adjust course where necessary.

The diversity of backgrounds, networks and experience of the Board members ensures a well-rounded collective with significant insight intobusinessand industry,economicaffairs,politics and government, infrastructure development, finance,investment and sustainability. Members bring an appropriate mix of the range of specialist expertise required to guide the organisation in its diverse activities, and the Board benefitsfrom the insight and institutional knowledge of its long-standing founder members.

Board members are carefully selected not only for their specialist expertise and knowledge, but their in-depth understanding of the socio-economic development challenges of the Eastern Cape and South Africa, and the complexity of managing mega-projects such as the Coega IDZ as a mechanism for responding to those challenges.

These qualities of the Board – specialist skills and knowledge, diversity of experience and networks, in-depth understanding of the organisation and its external environment – play a vital role in the organisation’s ability to deliver value creation to its diverse stakeholders.

In addition, a strongly integrated and transparent governance system in line with best practice supports the work of the Board, with the Company Secretary as interface between the Board and the organisation, ensuring consistent application throughout all levels of the business and enabling the CDC to maintain its position as a leader in accountable corporate governance.

The two committees of the Board – Audit and Risk (ARC), and Human Resources and Remuneration (HRRC) – meet bi-monthly to consider specific material and strategic issuespertinent to their terms of reference, which have been formalised and approved by the Board. Their smaller size and more frequent meetings enable key issues to be swiftly addressed.

The CEO and Executive Management Committee (EXMA) are responsible for overseeing the operational execution of the corporate strategy and implementing decisions of the Board. Day-to-day operational responsibilities are delegated by the CEO to the Executive Managers, and the CEO regularly reports to and engages with the Board and Board Committees, ensuring afreeandtransparentflowofinformationtosupportinformedand integrated decision-making at all levels.

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BOARD OF DIRECTORS

Appointed: 1999

Paul Jourdan is an independent consultant on resource-based development strategies, working across several African states as well as for SADC, the AU and UNECA. As Deputy Director-General in charge of Special Projects at the dti, Jourdan was responsible for the establishment of the IDZ programme, with the Coega IDZ and CDC as pioneers. Later, as CEO of Mintek, he contributed to minerals beneficiationgrowth strategies, including the planning of the metallurgical cluster at Coega.

Dr Jourdan holds a BSc in Geology and a BA in African Government from UCT; a Postgraduate Diploma in Exploration Geophysics from ITC (International Institute for Aerospace Survey and Earth Sciences) in Delft; an MSc in Mineral Economics from Wits University; and a PhD in Politics from Leeds University.

Appointed: 1999

Jan de Bruyn is a past deputy managing director of the Industrial Development Corporation of South Africa (IDC), from which he retired after a 32-year career. He was a member of the Manufacturing Development Board – the entity that issued the CDC’s operating licence – for more than 20 years, 12 of those in the chair. De Bruyn has served on, and in many cases chaired, the Boards of leading South African corporates, including Algorax, Gencor, Hulett Aluminium and Saldanha Steel, as well as the Small Business Development Corporation, the executive of the Johannesburg Afrikaanse Sakekamer and the Afrikaanse Handelsinstituut (AHI).

Appointed: 1999

Mninawe (Pepi) Silinga is the founding CEO of the CDC, appointed on the establishment of CDC in 1999.

Silinga is a professionally registered Civil Engineer (Pr. Eng), Project Manager (PMP), Chartered Director (C.Dir) and a fellow of the South African Academy of Engineers (SAAE). He holds a BSc (Eng) from the University of KwaZulu-Natal, MSc (Eng) (Wits) and an MBA from Heriot-Watt University in the UK, and has participated in management programmes with Unisa (MDP), Stellenbosch (CMP), Oxford and INSEAD (AMP).

He currently serves on the Boards of public sector organisations Brand South Africa and Agrément South Africa.

Silinga’s distinguished service and outstanding contribution to socio-economic development in the Eastern Cape through bringing the vision for the Coega IDZ to life was recognised in late 2014 with the Prestige Award of the NMMU Council.

JAn dE BruYn

dr PAul JOurdAn: CHAIrPErSOn (ACTInG)

mnInAWE (PEPI) SIlInGA: CHIEf EXECuTIVE OffICEr

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Appointed: 2010

Sybert Liebenberg, head of the Science and Technology Park of the East London IDZ, is a seasoned executive with experience in research, strategy development and operational management. He previously served as acting Head of Department for the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism and as interim Chief Executive Officer of the EasternCape Parks and Tourism Agency. He is a member of the Board of Governors of Stenden University.

Dr Liebenberg holds BA, BA Hons (Political Science) and Master’s (Public and Development Management) degrees from the University of Stellenbosch, and a PhD in Development Studies from NMMU.

Appointed: 2014

Babalwa Lobishe holds the portfolio of Economic Development, Tourism and Agriculture on the mayoral executive committee of the NMBM.

She joined the ANC in 1999 and assisted in community mobilisation and development. She was elected as a branch secretary for the South African Student Congress in 2000 and served on the provincial executive of the ANCYL from 2008 to2010. From2008until recently,Lobishe was an ANC regional leader on the Sports and Economic Development desk. She was deployed to the mayoral committee in the Sports, Arts and Culture portfolio in 2011 and moved to her current position in 2013.

Lobishe has a BCom degree from NMMU and is currently studying towards her Master’s in Public Administration at the University of Fort Hare.

Appointed: 2007

Pumelele ‘Bicks’ Ndoni has played a leading role in local government since 1996 when he was elected as a councillor on the Uitenhage Transitional Local Council. He served as Mayor of Uitenhage from 1999 to 2000, when the Nelson Mandela Metropole was formed from Port Elizabeth, Uitenhage and Despatch. He served as Portfolio Councillor for Infrastructure, Engineering and Energy in that structure until 2001 and was appointed the first Deputy ExecutiveMayor of Nelson Mandela Bay in 2002, serving in that position until 2009.

Ndoni previously worked at Goodyear in Uitenhage and holds a BA degree from Vista University.

BABAlWA lOBISHE

SYBErT lIEBEnBErG PumElElE ndOnI

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Appointed: 2011

Sipho Zikode is the acting CEO of SEDA and a Deputy Director-General of the dti, responsible for the Broadening Participation Division. He joined the Technology Promotion Division of the dti in 1997, having obtained a BCom (Economics) from Wits University. His career path at the dti saw him rise to Deputy Director: Defence Portfolio and then Chief Director: Industrial Participation in 2003. He was appointed to his current position in 2011.

Zikode also holds a Postgraduate Diploma in Marketing Management (Unisa), a National Diploma in Chemical Engineering from Mangosuthu Technikon and an MBA (University of Pretoria).

SIPHO ZIkOdE

Appointed: 2014

Advocate Thandi Norman SC was admitted as an advocate in Bhisho in 1992, and to the Bhisho Bar in 1997. She took silk in 2011. She brings valuable expertise to the CDC Board through her preferred areas of practice in shipping, competition, constitutional and administrative law.

She has appeared in the Constitutional Court, the Supreme Court of Appeal, in various High Courts, the Land Claims Court and Labour Court. Adv Norman chaired the RTI Commission (February 2013 to March 2014) and acted as evidence leader in the Pillay Commission (2005) and the Goldstone Commission (1995), both in the Eastern Cape. She was also a PresidingOfficeratthecountry’sfirstdemocratic elections and has acted as a judge from time to time since June 2002 in the Eastern Cape and KwaZulu-Natal.

Adv Norman holds a BJuris LLB degree and aCertificate in Shippingfrom the Chartered Institute of Shipping.

THAndI nOrmAn

Appointed: 2014

Shabeer Khan is the Chief Financial Officer of the dti, leading the Financial Management Services team responsible for the department’s overall spending and aligning priorities with the necessary funding to ensure the dti achieves its objectives. He is a member of the dti’s Executive Board as well as the Bid, Risk and Ethics committees.

Mr Khan holds a BCom Honours degree and is a registered Chartered Accountant. He joined the dti in 2013, having previously worked for the Auditor-General of South Africa where he was responsible for managing numerous audit portfolios and taking the lead in many United Nations audit assignments.

SHABEEr kHAn

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RESPECTED EXPERTS: Dr Paul Jourdan, chairperson of the Board, joins in conversation with fellow Board Member, Pumelele Ndoni.


AREA PROfILEAUDIT & RISK COmmITTEE

Appointed: 1999

See Jan de Bruyn’s profile under BoardMemberprofile.

Appointed: 2010

See Sybert Liebenberg’s profile underBoardMemberprofile.

Appointed: 2010

Temba Zakuza is an Audit Partner at chartered accountants Nkonki Inc. and has extensive experience in public sector governance. He was previously the head of the Department of Accounting at the University of Fort Hare and chaired the education, training and professional development committee of the Independent Regulatory Board for Auditors (IRBA).

Zakuza chairs the audit and risk committees of the South African Local Government Association (SALGA), Centlec, and Mbizana Local Municipality.

Zakuza has a BCom degree from the University of Limpopo and postgraduate accounting diplomas from UCT. He qualified as a Chartered Accountant(CA(SA)) in 1999 and as a CertifiedInternal Auditor in 2000.

Appointed: 2002 (Board); 2010 (ARC)

A widely-respected business leader, Ayanda Mjekula has over 20 years’ of experience in the banking sector, having held executive management positions in two of the four major South African commercial banks and served as chairperson of Ubank Limited.

As Chief Executive of the South African Supplier Development Agency (SASDA), Mjekula gained extensive experience in enterprise and supplier development. He has played a prominent role in the energy sector as a past chairman of the Central Energy Fund (CEF) and director of PetroSA.

Mjekula is the chairperson of the National ArtsFestival,servesontheBoardofSafikaHoldings and its audit and remuneration committees, is deputy chair of the Council of the University of Fort Hare and chairs its financeandinvestmentcommittees.

He is a member of the Institute of Directors of South Africa, and holds a BA degree in English (University of Fort Hare) and an MBA in Financial Accounting from Western Michigan University (USA).

Appointed: 2010

A Chartered Accountant (CA(SA)) with extensive board and audit committee experience, Nomfundo Qangule started her career in Nedcor’s Corporate and International Division. She has served as director and chaired the audit committee of Rand Mutual Assurance, and also served as a board member of Afrocentrix Health, Hans Merensky Holdings and Royale Energy.

Qangule was previously executive manager at Worldwide Africa Investment Holdings. SheisaCertifiedAssociateoftheInstituteof Bankers (CAIB, SA), a member of the KwaZulu-Natal Growth Fund Investment Committee, and a director and member of the audit committee of Rebosis Ltd and Nozala Investments.

Appointed: 2012

Kumaran Naidoo is Acting Director-General of the Department of Economic Development. He was previously the Group CFO of the dti.

Naidoo holds a BCom (Accounting) and Postgraduate Diploma in Computer Auditing from the University of KwaZulu-NatalandiscurrentlyfinalisinghisMasterof Business Leadership (MBL) through Unisa.

nOmfundO QAnGulE

AYAndA mJEkulA: CHAIrmAn

JAn dE BruYn

SYBErT lIEBEnBErG

TEmBA ZAkuZA

kumArAn nAIdOO

Inordertoensureindependentoversightoftheorganisation’sresponsetomaterialissuesviafinancialcontrolsandriskmanagement,the membership of the ARC is weighted towards independent, external members.

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Appointed: 1999

SeeDrPaulJourdan’sprofileunderBoardMemberprofile.

Appointed: 1999

See Jan de Bruyn’s profile under BoardMemberprofile.

Appointed: 1999

See Mninawe (Pepi) Silinga’sprofileunderBoardMemberprofile.

HUMAN RESOURCES & REMUNERATION COmmITTEE

Two non-executive directors comprise the Human Resources and Remuneration Committee. The committee makes recommendations to the Board on matters including general staff policy, remuneration, bonuses, Directors’ fees, services contracts andotheremployeebenefits.

JAn dE BruYn

dr PAul JOurdAn

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SPIC AND SPAN: The CDC headquarters, in Zone 1 of the CDC IDZ.

mnInAWE (PEPI) SIlInGA


AREA PROfILE

The Executive Management Committee (EXMA) is the CDC’s highest operational decision-making body. Convened by the CEO and with all Executive Managers as members, it is a key structure in enabling integrated thinking and integrated reporting by the organisation.

Withspecificauthoritydelegatedto itbytheCEOinorderto facilitateeffective,collectivedecision-making,EXMAconsidersstrategic matters relating to the CDC as a whole, as well as operational matters arising from the various business units, and acts to facilitate coordination of the activities of the business units.

EXECUTIVE mANAGEmENT (EXMA)

Joined CDC in 2004

Areas of expertise: Finance and supply chain management.

Joined CDC in 1999

Areas of expertise: Engineering, project management, leadership, economics.

Joined CDC in 2003

Areas of expertise: Business development management, strategy, engineering.

mnInAWE (PEPI) SIlInGA: CHIEf EXECuTIVE OffICEr

BOnGEkA JOJO (CHIEf fInAnCIAl OffICEr)

Joined CDC in 1999

Areas of expertise: Facilities and operations management, sustainable development.

THEmBA kOZA (OPErATIOnS)

ZukO mAPOmA (COrPOrATE SErVICES)

Joined CDC in 2002

Areas of expertise: Law, project management, management.

Joined CDC in 2003

Areas of expertise: Engineering, management, project management, economics.

CHrISTOPHEr mASHIGO (BuSInESS dEVElOPmEnT)

mOndE mAWASHA (PrOGrAmmE dIrECTOr: ICT, rESEArCH & STrATEGY, IrS)

Joined CDC in 2003

Areas of expertise: Project management, quantity surveying.

Joined CDC in 2003.

Areas of expertise: Engineering, project management,finance.

HEnnIE VAn dEr kOlf (COST EnGInEErInG)

dr mPumI mABulA(CEnTrE Of EXCEllEnCE)

CHumA mBAndE (BuSInESS dEVElOPmEnT - EXTErnAl PrOJECTS)

Joined the CDC in 2000.

Areas of expertise: Engineering, project management, management.

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PROGRAMME DIRECTORS

Programme Directors are responsible for the CDC’s infrastructure programmes under the External Services Unit, a growing component of the organisation’s business model as it brings its expertise in managing complex and mega infrastructure projects to assist in resolving government’s service delivery challenges. Clients include the Eastern Cape provincial departments of Health; Education; Roads and Public Works; Sports, Recreation, Arts and Culture; Rural Development and Land Reform; and Economic Development, Environmental Affairs and Tourism, as well as a number of provincial departments in KwaZulu-Natal and national departments.

Programme Director: EC-Department of Health (Healthcare Facilities Planning & Commissioning)

Programme Director: EC-Department of Education/DSRAC

(March 2006 to April 2014)

Programme Director: EC-Department of Education/DSRAC

(March 2014 to present)

Programme Director: KZN Programme

Programme Director: Department of Health;Facilities Management

ZAkHElE kunEnE

THEmBEkA POSWA

ZInE mTAndA

Programme Director: Wild Coast SEZ Programme

Programme Director: EC-Department of Health (Facilities Management)

Programme Director: IDZ Infrastructure Programme

Programme Director: Shared Services Unit

Programme Director (Acting): EC-Department of Health (Infrastructure)

dAVId lEfuTSO

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HEnnIE VAn dEr kOlf

PuSETSO mABETOATHAndO GWInTSA

ZukO mQHATHu

dr SIYABOnGA SImAYI

mArIA VAn ZYl


02PERfORMANCE INfORmATION

COEGA’S INVESTMENT VALUE TOPPED R1.889-BILLION DURING THE 2014/15 fy

R1.889-billionTHE COEGA IDZ HAD 31 OPERATIONAL INVESTORS By THE END Of THE 2014/15 fy, AMOUNTING TO R6.44-BILLION, AND IS ON TRACk TO 40 By THE END Of 2015/16 fy

31THE 350-MEGAWATT GDf SUEZ PEAKING POWER PLANT IS THE SINGLE LARGEST fDI PROJECT UNDER DEVELOPmENT WITHIN A SOUTH AfRICAN IDZ/SEZ

R3.2-billion

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STRATEGIC OVERVIEW

The CDC’s strategic direction is always guided by its core mission as an enabler of socio-economic development and transformation in the Eastern Cape. The over-arching aim since the CDC’s inception in 1999 has always been to address the twin challenges of unemployment and poverty through economic development.

The CDC has given effect to this mission through a series offive-yearrollingstrategicplans.Thisreportreflectsonthecompletion of the 2010/11 – 2014/15 strategy period, and looks to the next period of growth as envisioned in the 2015 – 2020 strategy that comes into play from this year.

Significantshiftsintheexternalenvironmentandthenatureofthe material issues affecting the CDC’s ability to create value for shareholders and stakeholders – particularly around the new SEZ legislation – have placed the organisation on a new growth trajectory in which it intends to become self-sustaining by 2020.

The diagram below captures the CDC’s Sustainable Growth Strategy for the next 5 years.

Strategic Direction 2015-2020

The overall objective of this Corporate Strategic Plan is to highlight the roadmap and action plan, that will guide the CDC’s efforts in achieving the five-year targets as reflectedbelow. Developing a Corporate Strategic Plan is a multi-faceted enterprise that goes beyond the simple crafting of targets. It includes the analysis of factors that enable and constrain the achievement of set targets and highlights the resources needed to achieve the set targets.

The organisation is at a juncture where it needs to convert its value offering to transcend to Integrated Value offering. These product lines are collectively referred to as Differentiated or Tertiary Services. This is borne out by the Innovation Strategy which is premised on taking advantage of complex systems and linkages.

2020 STRATEGIC GOALSOF THE CDC

STRATEGIC OVERVIEW

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BUSINESS INTELLIGENCE

FINANCIAL SUSTAINABILITy

STRATEGIC PARTNERSHIPS

1. Improve Funding

Opportunities

2. Manage Risk on Project

Delivery

3. Deliver CSI Projects

4. Attaining New Clients

5. Attain New Products

& Services

6. Optimise SMME

Development

1. Improve Productivity2. Improve Business Processes

3. Profitability Optimisation4. Improve Project Management

1. Increase Revenue

2. Customer Diversification

3. Manage Funding Risk

4. Diversify Products & Services

5. Increase Profit

6. Assure Return on

Investment

7. Reduce Client Turnover

8. Ensure Compliance

& Governance

9. Cost Control

10. Improve Productivity

These are value offerings that would take the following into account:

• Business process differentiated products – e.g. supply chain management;• The above to be augmented by smart ICT systems;• The utilisation of business intelligence to expose these differentiators and make them apparent;• Buildastrongandunifiedbrandimage;• Convert existing product lines to create a complex interlinked value chain; and• Explore new products and customers that are beyond the realm of the current CDC custom.

To keep on driving its goal of attaining sustainability as an independent business the CDC needs to expand its current operating model by using the following levers:

• Develop linkages that will result in new product/services and customers;• Manage the business processes on a continual basis to achieve organisational excellence;• Manage the business systems on a continual basis to achieve organisational excellence;• Utilise the new SEZ regulations;• Diversify funding options;• Managefinancialrisk;• Proactively strengthen and maintain brand image; and• Strengthen IT systems utilisation and expand business intelligence capability.


EASY MOVEMENT OF GOODS AND TRADE: The CDC is seamlessly linked to the Port of Ngqura, which ensures continued connectivity to the global East-West trade.

1. financial Sustainability2. Strategic Partnerships3. Business Intelligence


BUSINESS OVERVIEW AND PERfORMANCE

BUSINESS OVERVIEW AND PERfORmANCE

The 2010-2015 strategy period saw significant shifts in theexternal environment – most notably the introduction of SEZ legislation, the end of grant funding for development of the IDZ, and the ongoing global economic crisis, together with South Africa’s energy security crisis.

The strategic plan is a dynamic entity. Various adaptations were madeoverthefive-yearperiodinresponsetoexternalchangesand material issues, resulting in adjustment of some of the targets set for the CDC’s Desired End State for the 2014/15 FY.

The core strategic objectives remained in place, however, ensuringastrongguidingdirectionfortheCDCoverthefive-year period, as well as in the year under review.

The key themes underlying the CDC’s strategic direction and drive to socio-economic transformation are:

• Job creation;• Investor attraction;• Training;• SMME procurement;• Investment value; and• Revenue generation.

Performance measures and achievements against the strategy are encapsulated in the CDC’s Balanced Corporate Scorecard for the 2014/2015 FY, and several strategic objectives. The following results can be reported:

• CdC self-generated revenue was r441.8-million against a target of R407-million for 2014/2015 FY;

• The value of domestic and foreign direct investment to the Coega IDZ was r1.889-billion against a set target of R1.627-billion;

• Job creation advanced 14 765 individuals and wasontrackagainstanemploymenttargetof14588in2014/2015 FY;

• A target of 5 595 was set for training and skills development, and CDC ensured that 8 147 individuals benefited from programmes andinterventions in 2014/2015 FY; and

• CDC recorded SmmE participation at 46.17%, exceeding the 35% target that was set at the start of the financialyear.

Other notable highlights for CDC included:

• The launch and opening of the R600-million truck assembly plant of FAW in Zone 2;

• The opening of the industrial gas air separation unit (ASU) of Air Products South Africa in Zone 3;

• Major construction projects in the Coega IDZ, which included the Dedisa Peaking Power Plant (R3.5-billion), the Digistics Logistics expansion (R32-million), ID Logistics (R53-million), the cold storage facility for Vector Logistics (R130-million) and the UTi Distribution Centre (R30-million);

• The opening of the R300-million DCD Wind Towers facility – a 23 000 m² wind tower manufacturing facility in Zone 3;

• The launch of the R400-million Agni Steels smelter facility in Zone 6;

• The appointment of a consultancy firm for anEnvironmental Impact Assessment (EIA) for a R2-billion aquafarming facility on 300 hectares of land in Zone 10 of the Coega IDZ;

• The delivery of 75 construction and refurbishment projects, including emergency schools, early childhood centres, and technical workshops which were handed over to the Department of Basic Education and the Eastern Cape Department of Education;

• The announcement of a Multi Original Equipment Manufacturers (OEM) complex for the automotive assembly and components manufacturing sectors in Zone 2 of the Coega IDZ on 306 hectares of land, which will embrace an OEM industrial clustering approach; and

• The awarding of Level 1 Black Economic Empowerment certificates to 500 small, micro and medium-sizedenterprises (SMMEs) who took part in the Black Economic Empowerment Competitiveness Improvement Programme (BEECIP) in KwaZulu-Natal and the Eastern Cape.

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FAW LAUNCH:SouthAfricanPresidentJacobZumaandMinisterofDepartmentofTradeandIndustryRobDavies,alongwithothergovernmentofficials,atthelaunchofFirstAutomotive Works (FAW) in 2014. FAW, a leading Chinese automotive manufacturer, launched its R600-million assembly plant in Zone 2 of the Coega IDZ in July 2014.


INVESTMENT ATTRACTION

Socio-economic transformation through industrial development and job creation is the core of the CDC’s vision. The role of the Investment Services business unit in attracting and retaining investment in the IDZ and NMBLP is thus central to the CDC’s ability to create and sustain value.

Investment promotion is the point of initiation from which the CDCisabletodevelopthediversifiedindustrialbasecriticalto the Eastern Cape’s future growth, in turn contributing to poverty alleviation through job creation, skills training and the empowerment of SMMEs.

The strong, multi-disciplinary Investment Services team is the first point of contact for prospective investors.The CDC’sintegrated business approach thus crucially ensures that, from this first contact point, investors are assisted seamlessly inprogressing projects from concept to completion.

The CDC’s successful track record in executing complex enabling projects requiring the participation of multiple stakeholders – including government, regulatory bodies,

developmentfinanceinstitutions,investors’technicalteams,andmany other parties – comprises the cornerstone of the value proposition presented by Investment Services to prospective clients.

The benefits of clustering for optimisation of integratedsynergies, operational alignment and strengthening of the value chain is at the core of the CDC’s investment promotion strategy. Multi-disciplinary sector experts, each focused on a particular cluster in the IDZ, have ensured the CDC’s success in progressing from its initial anchor tenant approach to attracting a diverse mix of tenants in terms of size, sector and nationality, along with catalytic mega-projects such as the Dedisa peaking power plant and PetroSA’s Project Mthombo.

Investment promotion takes place globally, with a particular focus on a “Look East” strategy, which has paid dividends in that at any one time, approximately 40% of the CDC’s investment pipeline comprises investors with direct or indirect links to the Asian continent.

Following on its breakthrough into “double digit territory” in the2013/14financialyear–inwhichCoegabecamethefirstIDZ on the African continent to secure 10 new investors in one financial year – 2014/15 FY proved another record-breakingyear for the CDC. Exceeding all targets, and in an economic and investment climate that remained challenging, a total of 19 investors were signed in 2014/15 FY, with a combined investmentvalueofR1.889-billion–thehighesteverconfirmedfortheCoegaIDZinasinglefinancialyear,asdepictedintheinvestment services dashboard.

Particularly notable was the fact that several of these, including the Agni Steels rolling mill, Coega Dairy, Coega Cheese, Rehau, Q-Plas and the Discovery call centre, were expansions by existing tenants – indicating both the success of their location in the IDZ in growing the business, as well as these tenants’

satisfaction with the location.By the end of the 2014/15 financial year, the Coega IDZboasted 31 operational investors. Meeting the CDC’s strategic objective to ensure a diversified tenantmix, the operationalinvestors originate from a range of sectors, including automotive manufacturing, agro-processing, chemicals, energy, logistics, andmetals.Reflectingthegeo-strategicpositioningandglobalinvestment destination status of the Coega IDZ, the operational investors are drawn from across the globe – 14 from South Africa and the balance from Europe, the USA, India and China, either independent of or in joint ventures with South African investors.

Looking Forward

With the passage and implementation of the SEZ bill, the Coega IDZ is now an SEZ. In order to take advantage of the new SEZ legislation, the CDC will target local investors focussing on import substitution and foreign investors that utilise local materials for productionandbeneficiation.

DomesticdirectinvestmentwillbecomeamajorgoalandstrategicimperativefortheCDCinthenextfiveyearsanditsstrategyshould acknowledge this. This strategy, while requiring a change in marketing focus, must also look at the creation, introduction and promotion of incentives for export-oriented companies.

TheCDCwillalsorelook,redefineandreinventcurrentlandandinfrastructureofferings.Thiswillincreaseitsflexibilitytocrafttailor-madeofferingstoinvestorrequirements,andintroducenewbenefitsthatarenotcurrentlyavailable.

Criteria Target Actual % AchievementSigned investors 11 19 172%

Signed & converted to lease agreements 4 9 225%

Investment value R 1 632 050 000 R1889931078 115%

Jobs created 14588 14 765 101%

Performance Review & Outlook

Investment Services Dashboard

# Investor land/Building Sector Country of Origin

Investment Value

1 Nollen Group Land Agro-processing SA R40-million

2 Corro Master Land Light Manufacturing SA R90-million

3 MSC Land Logistics Italy R50-million

4 Kenako Concrete Land Metals SA R78-million

5 NeOn Energy Existing Building Renewable Energy Italy R72.8-million

6 TDS (Rolling Mill) Land Metals SA R353.8-million

7 MM Engineering Building Metals Turkey/SA R350-million

8 AGNI Rolling Mill (Expansion) Land Metals India/SA R425-million

9 Coega Dairy Building Agro-processing SA R4.497-million

10 Coega Cheese Building Agro-processing SA R20.7-million

11 Lension JV Building Chemicals Malaysia R16.5-million

12 REDISA Land Automotive SA R41-million

13 Spiral Wrap Building Chemicals SA R19.87-million

14 Rehau (Expansion) Building Automotive Germany R165-million

15 Q-Plas (Expansion) Building Automotive Germany R110-million

16 River Edge Building Agro-processing SA R9.96-million

17 Ya-Lapa Building Agro-processing SA R10-million

18 CAPITA Building BPO SA R12.7-million

19 Discovery Building BPO SA R20.1-million

TOTAL R1.889-billion

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BUSINESS OVERVIEW

The Operations Business Unit (OBU) plays a key role in delivering on the Coega IDZ’s value proposition to investors of world-class infrastructure, customised investment solutions, and supply chain integration, as well as making a substantial contribution to the CDC’s strategic objective of financialsustainability through its revenue-generating activities.

Operations creates value for tenants and investors – and in turn for the CDC – through provision of: utilities and services; maintenance of buildings and equipment at the required levels of quality; mutually beneficial commercial agreements; andresponsive IDZ security. The unit is committed to fostering positive investor relations through service excellence in terms ofquality,dependable,on-timedeliveryandmutuallybeneficialpartnerships.

The value-adding support services provided by the OBU ensure a stable environment for tenants and investors, enabling them to focus on their core business and supporting economic productivity and job creation.

The OBU aims to support the CDC’s key objective of providing an integrated, value-adding logistics and supply chain solution thatmaximisesefficiencyandminimisesturnaroundtimes,withan enabling environment that includes trade logistics, port and back-of-port operations, customs management and transport linkages.

OBU provides the following services:

• Facilities and asset management for the Coega IDZ, Nelson Mandela Bay Logistics Park, Vulindlela Accommodation and ConferenceCentre(VACC),andCDCsatelliteoffices;

• Investor Services;• Commercial Services;• Customs, Logistics and Security Services; and• Safety, Health, Environment and Quality (SHEQ)

Management.

The OBU impacts on a wide range of stakeholders, including the CDC’s tenants, suppliers, surrounding communities and local businesses. Prudent consideration of social, economic and environmental sustainability forms the basis of all decision-making – focused on creating long-term value for the business and stakeholders.

Performance Highlights

Key performance highlights in the 2014/15 financial year forOBU included:

• Achieving the highest revenue to date for VACC; revenue of r53-million was an over achievement of 55% on the

2014/2015target,netprofitwas30%andtheclientbaseincreased by 40%;

• Facilities and Estate Management exceeded its budgeted revenue target of r62-million by r4-million;

• Obtaining approval of funding from the dti for the Customs Control Area (CCA), overseeing the implementation of the CCA in Zone 2 of the Coega IDZ, and the development of a new laydown area;

• The introduction of a strategic project to ensure availability and quality of utilities to investors in the IDZ andtheNMBLPthroughtheReturnEffluentWaterSchemeand construction of the reservoir on Coega “koppie”, which commenced during the period under review;

• Achieving an overall score of 3.8/5 for customer satisfaction levels, for its responsiveness and maintaining customer relations;

• The introduction of an Air Quality management Programme, consisting of an Air Dispersion Model for the IDZ, and the monitoring and maintenance of three air quality stations in the IDZ to allow effective management of the air quality within the IDZ; and

• The finalisation of the Coega East Master Plan through further additions which make provision for the development of an Aeronautical and Advanced Manufacturing Cluster, the Manganese Terminal and associated infrastructure such as the Rail Compilation Yard, an Aquaculture Development Zone, and a Petro-Chemicals cluster.

Incontinuallyrefiningitsbusinessmodel,theOBUalsofocusedonachievingthefollowinginthe2014/15financialyear:

• Improving administrative systems to reduce time spent on regular tasks;

• Focusing on adherence to project management processes and methodology;

• Increasing coordination with other CDC units;• Clarifying the roles between the CDC and Transnet Port

Operations; and• Identifying the commercial space wherein CDC will

extract and deliver value within Port Logistics and External Programmes.

Looking Forward

The development trajectories of the Coega IDZ and the Port of Ngqura are intrinsically linked. Transnet’s commitment to spend R300-billion on capital projects through its 2013-2019 Market Demand Strategy is anticipated to impact positively on the IDZ through improvements to port operations and facilities, and to the freight rail network. The focus of CDC Operations should prioritise improving road links, which are currently under the control of different authorities.

Transnet Freight Rail should ideally also be lobbied to equalise rail tariffs between the Metro and Gauteng in order to level the playing fields towards improved competitiveness. Tariffequalisation does need to be accompanied by the provision of the necessary rolling stock and other systems to accommodate highervolumesoftrafficalongtherailline.Shortseashippingservices should also be investigated.

From a micro perspective, the VACC will extend its marketing into new provinces, with the target of a client base increase of at least 10%. The Business Processing sector is also exhibiting increased economic activity, with the CDC signing commercial terms with two international investors. Construction and commencement of these two operations will commence in

early 2015 and lead to in excess of 1 600 new call centre jobs being created.

Successful logistics zones and corridors throughout the globe are built upon sustainable and effective public-private partnerships. It is envisaged that the CDC should throughout its continued progress, actively identify potential areas for such partnerships, and then strategically seek out private partners in order to realise their forging and development.

Additional resources will be required over the next three years in both Logistics and Customs as the CDC operationalises the twoCCAsandseekstofurtherdefineitsback-of-portbusinessmodel.

OPERATIONS

FOCUSONDEVELOPMENT:SeamlessintegrationbetweenDeepwaterPortofNgquraandCoegaIDZenablesoperationalefficiency.

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INfRASTRUCTURE DEVELOPmENT

BUSINESS OVERVIEW

Development in the IDZ and NMBLP is a combination of municipal infrastructure, enabling municipal infrastructure, top structures, and services and service connections, to self-buildinvestors.Thefive-yearstrategyoftheIDZInfrastructureProgramme (IIP) aligns project planning and implementation to the CDC’s corporate strategic plan and focuses on:

• Provision of municipal infrastructure in the IDZ and NMBLP;

• Provision of enabling municipal infrastructure to the IDZ and NMBLP;

• Provision of top structures when required within the IDZ and NMBLP;

• The alignment of IIP development policy with SEZ funding principles; and

• Maximising job creation and training opportunities on all projects implemented.

The IIP works closely with the Business Development and Operations (Commercial and Facilities Management) business units to provide cost-effective solutions to targeted investors and ensure that the allocated sites match the spatial development plan of the IDZ. The Design Review Process for Site Development Plans (SDP) ensures that developments comply with municipal architectural and landscaping guidelines, enabling expedited approvals by the NMBM.

IIP planning is done in collaboration with the Spatial Development Unit of the CDC in order to ensure compliance with the development vision articulated in the approved Package of Plans for the Coega IDZ. All planning and construction is undertaken with a view to maximising the SMME content of each project (minimum 35%), targeting 10% skills training, whilst driving enterprise development through local content.

Based on detailed background information obtained from

potential investors, site allocations and cost estimates are prepared to enable the commercial component of the CDC to commence with negotiations and rental agreements.

The core development area (CDA) of the IDZ obtained Environmental Authorisation (EA) earlier than the area east of the Coega River and is therefore at a more advanced state of readiness. Enabling infrastructure is in place in the CDA to service the needs of smaller investors with infrastructure at municipal level. Establishment of bulk services and a primary distribution grid to enable development is still underway east of the Coega River, with a view to accommodating larger tenants. The electrical grid to Zone 6 and the main bulk water supply to this area have been completed, with the main bulk sewer line due for completion in the 2015/16 FY.

Similarly, development in the NMBLP’s CDA (Precinct A) has focusedonfirst,secondandthirdtiersupplierstoVolkswagenSouth Africa (VWSA) with extensions to facilities where suppliers are growing their manufacturing footprint to also supply Mercedes Benz South Africa (MBSA) in East London. The8000m2 extension to the Rehau facility is a case in point of developments that enable the growth and sustainability of the investors and the NMBLP.

The EIA for Precinct B of the NMBLP has been initiated, ensuring continued availability of industrial land to meet future anticipated demand.

Performance Review

The IIP has developed specialist project management skills for the implementation of municipal infrastructure projects, top structures and assistance with provincial health projects. Implementation of the IIP supports achievement of the CDC’s targets for job creation, SMME development, training and internships,asreflectedintheperformancetablebelow.

Financial

The SEZ programme aims to promote industrialisation, investment and job creation, building on the IDZ programme to create an internationally competitive value proposition. Under the model, funding applications are on a project basis, which limits the risks of budget constraints, suspension of works and unintended costs, for example due to legal action.

The CDC secured SEZ funding for the following projects in the year under review:

• CCA for Zone 1 and 2;• Construction of the Lension Warehouse in Zone 7;• Construction of the MM Engineering Warehouse in Zone 3;• Construction of a Multi-Purpose Agro-Processing

Warehouse in Zone 3;• Electrical supply upgrade to Zone 3;• Fire Rings in Zone 1 and Zone 3;• Construction of the ID Logistics Warehouse in Zone 1;• Multi-User SKD facility in Zone 2;• Construction of Spiral Wrap Warehouse in Zone 7;• Infrastructure for a CDC Manganese Facility in Zone 2;• Infrastructure for the Dedisa Peaking Power Plant in Zone 12;

and• Extension of the Coega Dairy Facility in Zone 3.

Project Implementation

The key area of activity in the year under review was the construction and completion of major warehouses in Zone 1,

as well as ongoing construction of multi-year projects which commenced in 2013/14.

The following projects were completed and commissioned:

• UTi Warehouse (Zone 1) – a 3 000 m² distribution warehouse custom-built for UTi to assist with easy vehicle movement, deliveries, conveyor systems, personnel requirements, and mess and ablution facilities for drivers;

• ID Logistics – construction of a 3 200 m² refrigerated warehousewithofficeportionandoutsidehardstandsforthe vehicles;

• Tank Farm access road for TNPA – construction of a single carriageway road, with services, to enable Transnet to access their property located on the eastern side of the Coega River; and

• Fire Ring – designed and constructed to enhance the municipal water firefighting system; this entailed theconstructionofacommunalfireringwithstoragetanks,pumps and internal reticulation to existing tenants in Zone 1.

The following projects commenced construction in the 2014/15 FY:

• Vector Logistics – 8 300 m² cold storage facilityon 49 000 m² of land. A contractor was appointed to construct the bulk earthworks and a main contractor for the construction of the top structure. The construction period is 10 months with completion scheduled for early 2015/16 FY;

• Digistics Logistics – expansion of the current warehouse

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Annual targets and achievements

focus Area Target Actual Performance Score new TargetJobs (No) 1040 1270 122% 4.7 1133

Training (No) 104 252 1423% 5 113

Interns (No) 7 7 100% 5 6

SMME (%) 35% 38.65% 110% 3.9 35%

ENERGY PROJECT: The R3.5-billion Dedisa Peaking Power Plant once complete will be able to generate 342 MW, nearly half of the Nelson Mandela Bay Municipality energy consumption.

70 71

facilities inZone 1 by 4 038m²will allow the investorto solidify its Eastern Cape operations and support future growth. Bulk earthworks were completed and construction of the top structure commenced;

• Laydown Area (Zone 1) – construction commenced in July 2014, with completion scheduled in phases in order toallowearlyaccess to thefirst section,as thePortofNgqura required a 12 ha partly-prepared laydown area for the storage of imported wind turbine components. It is anticipated that more than 200 wind turbines will enter through the Port, each requiring up to 10 abnormal road vehicle loads for transport to project sites. The second section was under construction at year-end;

• Coega Cheese – tenders were invited for construction of a 1 332 m² production facility, 5 500 m² warehouse and 500m²officespace;

• Multi-Purpose Agro Processing Hub – aligned to the CDC’s strategic objective to become a hub for agro-processing in South Africa by 2020, construction of a 7 000 m² facility commenced and is scheduled for completion in the 2015/16 FY;

• Bulk sewer and return effluent projects – these weredelayed by labour unrest, SMME demands and payment delays. Both projects will recommence as soon as the Multi-Year Budget has been approved by the dti; and

• Construction Village – a number of units were upgraded from single- to double-storey, using SMME contractors. It is anticipated that the overall project will be completed in the second quarter of the 2015/16 FY.

The Defects Liability Period expired on several projects completed in the 2013/14 FY, enabling projects to be closed outandfinalpaymentsmade.These included:FamousBrandslogistics warehouse, DCD warehouse and the Zone 4 wall. Projects that are still within the Defects Liability Period for which retention was kept included the Cheese Factory, RIC Phase 4 (carpentry training warehouse), RIC Phase 4b (bricklaying, plastering and plumbing training warehouse), RIC Phase 5 (electrical, welding and painting training warehouses), Agni Steels electrical connection and the Rehau facility.

General Infrastructure Development

The CDC continued in the year under review with planning and design of bulk infrastructure for the undeveloped area east of the Coega River that falls outside of the CDA.

PlanningwascompletedontheReturnEffluentinstallationandsupply to the IDZ. The feasibility study, with concept and some detail designs, is intended to provide a bankable proposal to enable securing of funding, phasing and sectional implementation of the infrastructure.

Looking Forward

The IIP ensures that the CDC is able to offer quality and readily available infrastructure and turnkey solutions as key selling points to potential investors. As the Coega IDZ continues to grow and attract new investors, the infrastructure development programme will continue to roll-out, with a particular focus on the following as identified needs for the next phase ofdevelopment:

• Infillandtenant-specificmunicipalinfrastructurewillhaveto be provided to prospective investors west of the Coega River;

• Bulk,infillandtenant-specificmunicipalinfrastructuremayhave to be provided in Zone 5 to accommodate large investors;

• Bulk, infill and tenant-specific municipal infrastructurewill have to be provided in Zone 6. This work includes Agni Steels and the Dedisa Peaking Power Plant, as well aspreparationsforPetroSA’sCrudeOilRefinery(ProjectMthombo) and associated developments;

• Bulk, infill and tenant-specific municipal infrastructurewill have to be provided in Zone 7 to accommodate the planned second entrance to the Port of Ngqura and to service Transnet’s new Tank Farm and other port facilities on the east bank of the Coega River. The infrastructure will also service new investor warehouses that will be constructedwithinthe2015/16financialyear;and

• There are likely to be further requirements for infill ortenant-specificmunicipalinfrastructureduringthecurrentMTEF period, and beyond. This will depend on:• The outcome of current engagements between

DEA and Transnet concerning the development of short- to medium- and long-term bulk materials handlingoperations,specificallyformanganeseoreexports through the Port of Ngqura;

• The outcome of current engagements between DEDEAT and Transnet concerning the development of mariculture operations in Zone 10.Theseoperations have been identified in thedti’s current IPAP;

• The outcome of the current environmental authorisation process for a renewable energy investor (wind). These investments have been identifiedindti’s current IPAP and in the Eastern Cape’s Renewable Energy Strategy; and

• Negotiations with potential investors to be located in the IDZ.

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LAYDOWN AREA: Wind turbine components awaiting transport at the 12 hectare laydown area in the Coega IDZ, Zone 1.


EXTERNAL PROGRAmmES

BUSINESS OVERVIEW

The service delivery challenges facing all three tiers of government are well-known and make headlines almost daily. The CDC’s strategic response has been to bring its expertise in mega-project management and infrastructure development to the fore in concentrated action as implementation agent for a range of provincial government infrastructure projects. This response extends the impact of the CDC’s socio-economic development vision, to leave a legacy of public infrastructure, skills development and job creation.

These projects fall under the External Programmes business unit, whichplaysakeyroleintheCDC’sstrategyforfinancialself-sustainabilitybysupportingtheCoegaIDZthroughdiversifiedincome streams and reduced reliance on grant funding. These programmessignificantlysupportCDC’svaluecreation–notonly in terms of revenue generation but also in training and skills development, job creation, and empowerment of SMMEs, women and youth.

Theimpactoftheseprojectsissignificantforthecommunitiesin which they are based, providing skills training and job opportunities in the construction phase and thereafter improved service delivery and public infrastructure.

The External Programmes unit deploys not only the CDC’s technical expertise in project management and infrastructure development, but also the models that it has developed and successfully implemented in the IDZ in terms of occupational skills training, labour management, and empowerment of SMMEs, women and youth entrepreneurs. These models have been replicated and adapted for the CDC’s role as implementing agent on public sector infrastructure projects, and contribute significantlytoensuringthattheseprojectscontributeto jobcreation and economic empowerment in the communities wherein they are implemented.

The CDC has managed the implementation of numerous schools, hospitals and road-building projects in the Eastern CapeandKwaZulu-Natalsincethe2006/07financialyear.

The organisation’s External Programmes are managed by Programme Directors situated in Port Elizabeth, East London, Durban and Pretoria, servicing a growing range of clients on major infrastructure projects.

External Programmes established a dedicated business developmentunit in the lastquarterof the2013/14financialyear to grow its portfolio by expanding the client base, developing new business lines, strengthening client relationships, and assisting clients through the development of new models for infrastructure funding.

Clients serviced in 2014/15 FY:

National government

• Department of Health;• Department of Basic Education; and• Department of Public Works.

KwaZulu-Natal provincial government

• Department of Education;• Department of Cooperative Governance and

Traditional Affairs; and• Department of Social Development.

Eastern Cape provincial government

• Department of Human Settlements;• Provincial Treasury/Department of Economic

Development, Environmental Affairs and Tourism;• Department of Education;• Department of Sport, Arts, Recreation and Culture;• Department of Health; and• Department of Roads and Public Works – Roads

Enterprise Development Programme (REDP).


Revenue generated: r152 594 000Percentage of CDC total revenue: 34%Jobs created: 10 873Increase in client base: 33%New business: 12 clients

The New Business Development unit assisted in achieving a 33% increase in programmes managed by the CDC in 2014/15 FY,from8programmesto12,including:• National Department of Health – planning, design,

construction and commissioning of hospitals and clinics in Gauteng, Free State and Eastern Cape;

• National Department of Public Works – facilities management for the Robben Island World Heritage Site; Prestige Projects Rehabilitation Programme at the Pretoria Ministerial Complex, Cape Town Parliamentary Village and the Union Buildings. The project also includes skills development for DPW technical staff;

• KZN Department of Co-Operative Governance and Traditional Affairs (Cogta) – installing of solar panels and generators for royal households and community centres; and

• EC Treasury and DEDEAT – assisting in the implementation of social infrastructure in various municipalities, including eradication of bucket sanitation in NMB.

In addition, infrastructure programmes are currently being finalised for theWestern Cape and Mpumalanga provincialgovernments.

Performance Highlights:

• Through its External Programmes, CDC manages 95% of the R2-billion Eastern Cape provincial budget for health infrastructure, and effectively manages more than 1 400 health facilities, impacting on the lives of 4.5 million of the province’s citizens. The EC Health Department was assessed by National Treasury and the national Department of Health and recognised in the President’s budget speech in February 2015 as the best-performing provincial health department in terms of infrastructure delivery;

• New capital works for the EC Department of Health include the R1.4-billion Cecilia Makiwane Hospital project and the site for the NHI in Mthatha;

• The CDC successfully managed the Roads Enterprise Development Programme (REDP) for the EC Department of Roads and Public Works. The programme encourages local growth and development through the mentoring of smaller contractors towards their enablement to obtain future project contracts;

• The CDC further provided project management services for both the conclusion of historic projects and management of new projects;

• CDC’s contract to manage the REDP concluded in March 2015 and the programme was successfully closed out with completion of all projects, handover of the project managementofficeback to theDepartment, a full audit,and documentation of the lessons learned in order to support skills transfer; and

• The CDC’s Implementing Agent service provision to the Eastern Cape Department of Education and its School Building Programme has included the planning, construction and provision of emergency schools, early childhood centres, technical workshops and the eradication of mud school structures in order to provide a conducive learning and teaching environment for learners and educators.

2013/14 FY 2014/15 FYNo. Business Unit No. Current No. Projects Added

(Agreements Signed)

1 DoE (KZN) 1 DoE (KZN) 1 Cogta - KZN

2 EDU 2 EDU 2 DHS

3 DoE DSRAC 3 DoE DSRAC 3 NDoH

4 DoH 4 DoH 4 NDPW - Prestige

5 DoH Facilities 5 DoH Facilities

6 DRDLR 6 DRDLR

7 KZN Social 7 KZN Social

8 DBE KZN 8 DBE KZN

9 DoH Planning 9 DoH Planning

Summary

Projects Assessed in 2013/14 FY 9

Projects Assessed in 2014/15 FY 8

Projects Added during 2014/15 FY 4

Total Projects in 2014/15 FY 12

% increase from 2013/14 FY 33%

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• Morethan100schoolsinfivedistrictsintheEasternCapebenefitedfromimprovedsanitation,ablutionfacilitiesandrainwatertanks in the Eastern School Sanitation Programme managed by the CDC for the EC-DoE;

• The school building and sanitation programmes created employment for 526 people in March/April 2015;• CDC managed the Accelerated Schools Infrastructure Delivery Initiative (ASIDI) of the national Department of Basic Education,

aimed at eradication of inappropriate school structures and providing basic services (water, sanitation and electricity) to schools. Theprogrammereflects governmentand theCDC’saimofbringingall schools in theprovince toanadequatestandard for effective teaching and learning; and

• Overthe2013/14and2014/15financialyear,theCDCbuiltandmanagedASIDIin26schools,withatotalbudgetofR451-million.

Current Schools Planning and Tendering stage Completed TOTAL

Number of projects 16 69 30 85

Value of projects R170-million R210-million R297-million

No. of classrooms 137 108 137

Floor area (m2) 6285 4916 6285

No. of toilets 113 88 113

Length of fencing (m) 9035 7067 9 035

Current Schools Completed TOTALNumber of projects 26 19 26

Value of projects R451-million R313-million R451-million

No. of classrooms 151 118 151

Floor area (m2) 5265 780 5265

No. of toilets 1303 1224 1303

Length of fencing (m) 9 292 3080 9 292

• Infrastructure development for the EC Department of Sport, Arts, Recreation and Culture (DSRAC) has brought much-needed community facilities to the people of the Eastern Cape. The CDC assisted DSRAC with: infrastructure planning and budgeting, and the planning, design and construction monitoring for libraries in Mdantsane, Mount Frere, Mount Ayliff, Ngqeleni and Sterkspruit; the Mount Ayliff Museum and Bayworld Museum in Port Elizabeth; and a public swimming pool in Butterworth. These projects have been collectively valued at R92-million.

External Programmes have achieved a consistent annual increase in revenue for the CDC, from R123-million in 2009/10 FY to R152-millionin2014/15FY.ThebusinessmakesasignificantcontributiontotheCDC’sself-generatedrevenue,whichexceededgrantfundingforthefirsttimein2013/14FY.Thiswasrepeatedin2014/15FY,withExternalProgrammescontributing34%oftheCDC’s total revenue.

Looking Forward

The current slow-down in South Africa’s economic growth has resulted in reduced expenditure by major infrastructure clients, drivingtheneedtodiversifytheExternalProgrammesclientbaseandtoexplorenewandfurtherdiversifiedincomestreams.

On the other hand, the National Development Plan, which is anchored by the New Growth Path and expressed in the National Infrastructure Plan (NIP), presents new opportunities in the medium- to long-term through the related Strategic Integrated Projects (SIPS) – and the CDC will, going forward, look to optimise its participation in those initiatives.

Theshort-tomedium-termfocuswillcontinueconsolidationoftheexistingportfolioanddiversificationintoadditionalprovinces.

2014/15 FY Performance:

ASIDI Programme Status 2014/15 FY:

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INFRASTRUCTURE UPLIFTMENT: CDC, as an implementing agent for ASIDI, has delivered 19 schools of 26 infrastructure upliftment programmes across the Eastern Cape, including Sophumelela Primary School, in Keiskammahoek.


The CDC supports the government vision and comprehensive programme for the transformation of South Africa’s economy, and remains deeply committed to economic transformation and the economic participation of black people in the South African economy.


Target: B-BBEE level 1 statusActual 2013/14 FY: B-BBEE level 1 statusActual 2014/15 FY: B-BBEE level 1 status

The CDC’s standing as an empowering organisation committed to socio-economic transformation was reaffirmed with theorganisation’s achievement of B-BBEE Level 1 status for the secondconsecutiveyear,havingbecomethefirststate-ownedenterprise to attain Level 1 in 2013/14.

The certification positions the CDC as a preferred serviceprovider and business partner, enhancing its ability to create value, particularly in its role as an implementing agent for public sector infrastructure projects.

CDC achieved a total score of 100 points on the Adjusted Generic Scorecard (AGS) for companies with an annual

turnover above R35-million, with B-BBEE procurement recognition of 135%.

The CDC also qualified as a value-adding supplier, definingthe organisation as one deemed to be adding value for clients through increasing their B-BBEE score under the preferential procurement element.

TheLevel1certificationwasissuedinApril2015,basedonthe2014/15FY,byaSANAS-accreditedverificationagency.

Looking Forward

The revised codes, which were implemented as of May 2015, pose both challenges and opportunities for the CDC and the organisation has begun setting strategies in place to achieve targets in line with the proposed changes. The organisation will also implementsector-specificprogrammestobenefitawiderange of SMMEs under its Enterprise and Supplier Development Programme.

BROAD-BASED BLACkECONOmIC EmPOWERmENT

The CDC’s performance on the Adjusted Generic Scorecard

ADJUSTED GENERIC SCORECARD

ELEMENT INDICATORS dti’s TARGET CDC SCORE

Direct Empowerment

Management Control% black people in executive management and/or executive and non-executive Board members

15 15

Human Development & Employment Equity

Employment EquityWeighted employment equity analysis: disabled employees, senior, middle and junior management

15 15

Skills Development Skills development expenditure as a proportion of total payroll.

20 20

Indirect Empowerment

Preferential Procurement Procurement from B-BBEE compliant supplier, black owned and black female owned suppliers as a percentage of total procurement

20 20

Enterprise Development Investment in black owned enterprises as a percentageofNetProfitAfterTax(3%)

15 15

Socio Economic Development Investment disadvantaged communities as a percentageofNetProfitAfterTax(1%)

15 15

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ENTERPRISEBOOST:TheCDCcertified300KZNsmall,microandmediumenterprises(SMMEs)throughitsBlackEconomicEmpowermentCompetitivenessImprovementProgramme (BEECIP).


PERfORmANCE REVIEW AND OUTLOOk

Driver Training Programme

The2014/15financial year has been veryproductive for theCDC Driver Training Programme. The project was expanded into KwaZulu-Natal and additional rural communities in the Eastern Cape. In the 2014/15 FY alone, the programme assisted 1249peopletoobtaintheirdriver’slicenseswhichisupby38%ascomparedto901inthe2013/14financialyear,asignificantboostfortheprogrammeanditsbeneficiaries.

The programme is one of most successful CDC CSI projects changing many lives in the process. It not only promotes and enables safer driving on South African roads but it also assists beneficiaries in positioning them better for employmentopportunities.

The CDC also expanded its innovative driver simulator programme, that enables learners to acquire basic driving skills before venturing out onto the roads. A greater success ratio has been achieved by ensuring participants spend a minimum of 20 hours on the simulators.

Maths and Science Academy Programme

The Maths and Science Academy assists learners that have been unsuccessful in passing these subjects in Grade 12 by providing weekday and Saturday classes. The academy assists learners to obtain the required marks to be accepted at a tertiary institution for Science, Engineering and Technology (SET) studies.

In2013,thefirstlearnerswereregisteredatdifferentexaminationcentres because the centre only started operating in May 2013. An application to be a part-time examination centre was made to the Provincial Department of Basic Education, which was granted. The centre registered 99 learners for physical science and100learnersformathematics.Learnerssatfortheirfinalexaminations in 2014/15 FY.

Thecentreachievedapassrateof89%formathematicsand81.8% for physical science. For the 2014/15 financial year,the organisation spent R1-million on the programme. Of the learners who registered for the maths programme, 19 qualifiedonadmission fortheSETcareersandattheendoftheprogramme56qualified. Therewere14physical sciencelearners registered who qualified on admission for the SETcareersandattheendoftheprogramme45qualified.

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CORPORATE SOCIAL INVESTMENT (CSI)

200

2010/11 FY

400

600

2011/12 FY

800

2012/13 FY

1000

1200

1400

2013/14 FY 2014/15 FY

Target

Actual

Driver Training Pass Results: 2010/2011 FY – 2014/2015 FY

Maths and Science Pass Results: 2014/15 FY

Number of learners

Pass Rate (%)on admission

Exit Pass Rate (%)

Average %on admission

Average %on exit

Mathematics 100 58 89 30.8 41.5

Physical science 99 27 81.8 31.7 39.5

Number of Learners Qualifying for SET

Careers on Admission

Number of Learners Qualifying for SET

Careers on Exit

Mathematics 19 56

Physical science 14 45

BUSINESS OVERVIEW

Corporate Social Investment (CSI) plays a major role in impacting the lives of disadvantaged communities and vulnerable groups in South Africa.

CDC’s strategy is to focus on multi-disciplinary initiatives that especially empower and upskill youth, provide care and support to individuals of communities in the lower echelon of society and affected by wealth inequality, and offer individuals with disabilities opportunities in corporate work environments.

Since its establishment, CDC’s CSI programmes have grown swiftly, delivering innovative and meaningful initiatives and interventions intheEasternCapeandKwaZulu-Natal.Duringthe2014/15financialyeartheCDCcontributedmorethanR13-milliontoCSIprojects.

DRIVERTRAINING:Duringthe2014/15financialyeartheCDCexpandeditsflagshipdrivertrainingprogrammeintoKwaZulu-NatalandadditionalruralcommunitiesintheEasternCape.


In 2014/15 FY, the CDC in partnership with First Automotive Works (FAW) SA distributed school uniforms to 300 learners in the Motherwell and Wells Estate areas as well as to 53 learners from the Grogro Informal Settlement near Kragga Kamma.

In the period under review, CDC secured and donated:

• 140 blankets and mattresses to the Community Chest (PE), the St. Stephens (New Brighton), the Animal Welfare Society, and the Educare Centre (Grogoro Informal Settlement); and

• 17 wheelchairs to the elderly and individuals with disabilities in various rural Eastern Cape communities.

Employee Involvement Programme

Through its Employee Involvement Programme, CDC staff are encouraged to participate and support the organisation’s CSI programmes through volunteer programmes, financialcontributions and donations in kind. Through the CDC Employee Involvement Programme, the followingorganisationshavebenefitedinthe2014/15FY:

• Isithembiso Babies Home in Walmer;• Mordecai Orphanage in Greenbushes;• Sililitha Soup Kitchen in Kwazakhele;• Ubuntu Education Fund in Zwide;

• Healing Minds Organization in Walmer;• Bethelsdorp Old Age Home Food Garden;• Bloemendal Soup Kitchen;• Luthando Youth Centre in Kwazakhele;• Rape Crisis Centre in Motherwell;• Khayalethu Youth Centre in Kragga Kamma;• Yokhuselo Haven in Walmer;• CANSA;• Animal Welfare Society;• East London Children and Youth Centre in Gonubie;• Masizame NPO in Mdantsane;• Masibabisane NPO in Mdantsane;• Kwa Mashu Old Age Home; and• Ethelbert Children’s Home in KZN.

Looking Forward

CDC CSI programmes are designed to have a legacy effect – they are meaningful, relevant and life-changing, and will continue totransformandimprovethelivesofbeneficiaries.

Current and forthcoming CSI programmes will continue to uplift and empower communities surrounding the CDC, and in areas where the organisation operates. It also aims to secure and facilitate investment in disadvantaged communities, people and community groups. The overarching goal of CDC CSI programmes is to concentrate on youth and women empowerment, improve quality of education and reduce crime.

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Mobile Science Laboratories

CDC’s Mobile Science Laboratories use modern technological based equipment to empower learners, assisting them to achieve higher marks to improve admissions at tertiary institutions. The programme also responds to the national crisis of scarce skills in physical sciences and further assists to boosttheconfidenceoflearnerstoventureintoSETcareers.

The average pass rate for physical science in regions with Mobile Science Laboratories in 2014/15 FY was 57%, in comparison with the Provincial average pass rate of 41% for Physical Science.

Township Flagship Schools Programme

The main objective of this programme is to revitalise schools in townships with strong performances in maths and science subjects. For 2014/15 FY, more than 100 hours were offered by CDC employees and R10 000 was raised. Some of the key highlights for the programme have been the upgrade of the library at Loyiso High School where computer chairs, study books and calculators were donated by the CDC for the Grade 12 learners. CDC employees also volunteered their time during the Saturday classes and were supported by the NMMU students who are members of the Golden Key Society. This has contributed to the major success of the programme.

Lawhill Maritime Bursary Scheme

Two learners of CDC’s Maths and Science programme were selected in 2014/15 FY to attend Lawhill Maritime Centre in Cape Town. CDC sponsored travel logistics as well as the required school uniforms.

Science Expos

The CDC Maths and Science programme established a working relationship with the Eskom Expo for Young Scientists to encourage its own learners to grow their interest in science. Annually, educators from Science Mobile Labs (SML) are guided on mentorship of learners that will participate at the expo.

In 2014, three SML educators participated in Eskom Expo:

• Two learners from Holomisa High school won Bronze in the Mthatha Regional Finals;

• One learner from Douglas Mbopa High school won Silver medal in the Port Elizabeth Regional Finals; and

• Two learners from David Mama High school won Silver in the East London Regional Finals and were selected to represent their region in the National Finals.

Youth Leadership Development Programme (YLDP)

The goal of the CDC YLDP is to build future leaders. This initiative seeks to reduce self-doubt among young people by developing personal and leadership skills. The YLPD academy is important because it provides an opportunity to students to interact on leadership issues thereby building capacity at the

Higher Education and Training Institutions, but also grooming future leaders.

Students from different HET institutions across the Eastern Cape participate, and in 2014/15 FY the academy was hosted by the KZN Provincial Government where the KZN HET institutions participated.

To date more than 120 students have gone through the programme including students from the KZN HET institutions.

Chess Development

Through the establishment of chess as an educational extra-mural activity, learners are given an opportunity to improve mathematical,reading,logicalandscientificskills.

TheCDCspentR60000duringthe2014/15financialyearandcommitted R50 000 for the rollout of the programme in rural areasforthe2015/16financialyear.

The benefits of playing chess is that learners realise theimportance and necessity of advanced planning. Chess helps with analytical and accurate thinking, develops the ability to interpret situations accurately, helps develop personality and character, andteacheshowtoattainanddevelopself-confidence.

ANF Accounting Academy

The ANF Accounting Academy focuses on providing special support to students from rural area schools, which fall in the quintile 1 and 2 schools category. The academy operates from Bethel College in Butterworth, and accommodates students across the Eastern Cape.

In 2014/15 FY, theCDC committed and spent R800 000 tokick start the programme, which had 66 students undertaking a bridging course with UNISA. This year, the 66 students have commencedwiththeirfirstyearstudies.

DisabilityAffirmationProgramme

CDC continued its DisabilityAffirmation Programme, whichprovides career opportunities for individuals with disabilities. In 2014/15 FY, 13 people assumed the role of data capturers and administrators on a contract basis for various business units on a contract basis in August 2014. CDC also provided special transportation services.

AlltheprojectbeneficiariesarebasedintheCDCHeadOfficein Port Elizabeth.

Social Assistance to Destitute Families

CDC CSI programmes provides social relief to families in need. Relief comes through the donation of goods such as blankets, mattresses, foam sponges as well as school uniforms to deserving children.

SOCIAL RELIEF: As part of the CDC’s CSI programmes to relieve destitute families in need of assistance, children from the Grogro Village received much needed school uniforms.


HUMAN CAPITAL SOLUTIONS

The Coega Human Capital Solutions (HCS) business unit gives effect to the CDC’s corporate objective of socio-economic development and transformation through occupational skills training, community empowerment programmes, and corporate social responsibility (CSR) interventions aimed at addressing systemic issues and imbalances. The unit adds value to the CDC’s job creation imperative by addressing the national shortage of construction, technical and artisan skills. Ithastransformedfromacostcentretoasignificantrevenuegenerator for the CDC.

Established in response to investor concerns with regard to labour stability and skills shortages, HCS contributes to the value proposition of the Coega IDZ through its provision of skills development and placement services geared to support the needs of IDZ investors. Ongoing, proactive engagement with key stakeholders – particularly organised labour – is managed through a precedent-setting Zone Labour Agreement (ZLA) and has led to a high level of labour stability in the IDZ while simultaneously providing labour flexibility and workerprotection.

In line with the CDC’s priority focus on socio-economic development as the cornerstone of its mission, HCS adopts a holistic, developmental approach to skills training and labour management, through its Social Facilitation Model, designed specificallyformega-projects.Themodelcombinestheelementsof socio-economic research and targeted interventions, training and labour management in a comprehensive scalable solution backed by a well-developed compilation of advanced IT applications which include a job seeker registration system, a labour management system, a learner management system and advanced analytics. The applications are web-enabled and capacitated for deployment anywhere.

With the CDC’s move beyond the IDZ and into the management of provincial infrastructure projects, the Social Facilitation Model has been further developed into a fully mobile training solution. HCS is the only accredited technical skills provider with an extensive fleet ofmobile trainingworkshops gearedto enable the training of artisans in the remotest of locations. Backedbythemobilesimulatorfleetandmobilelabouroffices,HCS is able to operate anywhere, as all its systems and facilities are now portable.

Key achievements of Coega Human Capital Solutions since inception include:

• Productivity: The cumulative time lost due to labour action since construction commenced in 2002 is 0.15%, against the construction industry best practice benchmark of 2.5%;

• localisation: Anaverageof87%locallabourabsorptionhas been achieved on all construction projects thus far managed by the CDC. This has been made possible by the integrated social facilitation approach and effective technical skills training delivery, regardless the remoteness of many construction sites;

• Employment: More than 21 000 previously unemployed people in the Eastern Cape have been placed in gainful employment;

• Skills development: The successful training of 76 736 peoplesince2002and8791duringtheyearunderreview;and

• revenue generation: HCS has transformed from a cost centre to a revenue generating programme, achieving cumulativegrowthof246%overthepastfiveyears.

Business Growth

• HCSachievedprofitabilityof24%,againstatargetof20%,on revenue generating programmes, and demonstrated 13%growthinrevenueoverthepreviousfinancialyear;

• A strategic decision to diversify sources of revenue – in the interests of greater resilience and sustainability – saw 55.2%ofthe2014/15financialyear’srevenuederivedfromgovernment departments and state-owned entities and 44.8%fromtheprivatesector;and

• HCS scored an external customer satisfaction rating of 4.1 out of a potential 5.

Labour Stability

• In partnership with the most prominent trade union operating within the CDC, the National Union of Metalworkers of South Africa (NUMSA), HCS conducted two week-long Shop Steward Capacity-building workshops, directlybenefiting36participantstherein.Theseproactivedevelopmental initiatives contribute to the continued labour stability enjoyed in the IDZ; and

• Limited instances of time lost through labour strike action were experienced, with the largely NUMSA component of the workforce on the Dedisa Peaking Power Plant – under construction by Group Five – embarking on relatively

short stoppages. This, the first instance of site-relatedstrikeactionintheIDZinthepastfiveyears,ledtotheIDZ recording the total time lost for the year at 1.4%. While higher than the cumulative 0.15% of time lost over theprevious12years,thefigureremainedwellbelowtheconstruction industry norm of 2.5%.

Expansion of Training Facilities

• A new division of HCS, now in its third year, the Skills Development Centre earned revenue of R7.7-million, covering 74% of its operational costs and placing it well on thewaytofinancialsustainability.TheCentreisprojectedtobreakeveninthenextfinancialyear;

• The Skills Development Centre increased the number of peopletrainedintechnicalandconstructionskillsto2018in the period under review, representing an increase of 33.3%overthepreviousfinancialyear;

• R9.5-million was invested in extending the Skills Centre’s training capacity through the purchase of additional state-of-the-art technical training equipment. This allowed the Centre to increase its offering from six trades to eleven. The new trades include joinery/wood machining – making Coega the first training provider in the Eastern Capetooffer this trade–aswellasboilermaking,fittingandturning, and industrial electrical; and

Number of People Trained

HCS Growth

6 300 000

2011

9182432

2012

12487881

2013

26 944 970

2014

30810000

2015

1 570666 88

2 047 1 419 2 045

55987 443 8226

10826

13 607 14 410

2002

/2003

2003

/2004

2004

/2005

2005

/2006

2006

/2007

2007

/2008

2008

/2009

2009

/2010

2010

/2011

2011

/2012

2012

/2013

2013

/2014


Corporate KPI Target Actual % AchievementRevenue Generation R28-million R30.8-million 108%

Training 5 595 8147 146%

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• The Centre also expanded its facilities for teaching hydraulics and pneumatics, which underpin many trade specialisations, and procured equipment for jewellery making and design.

Assistance to Work Seekers

• The number of active users of the HCS online jobseeker database – Gateway2Opportunity (www.g2o.co.za) – increasedfrom275469to311268in2014/15FY.Severalenhancements were made to G2O to improve its user-responsiveness and accessibility, and it is now integrated with Twitter, LinkedIn and Facebook to allow job seekers

to be kept notified and to access job opportunitiesinstantly from any smart device. The social media capability thus enabled also allows HCS to receive live feedback and to maintain a lively interaction with its stakeholders; and

• Mobile labour desks were increased to a total of 11 during 2014/15 FY. These desks now operate from Mdantsane, Khotsong, Queenstown, Zwide and Greenbushes in Port Elizabeth, Port Alfred, Mthatha, Ngcizela in Kentane, Nessie Knight in Qumbu, Sipetu in Ntabankulu, and Mjanyane in Engcobo, in addition to labour desk operations within the Coega IDZ. The full suite of HCS services is available to localcommunitiesatallofthesesiteoffices.

New Service Offering Additions

• HCSaddedafully-fledgedpsychometrictestingfacilityandis now carrying the broadest range of psychometric tests in the Eastern Cape. The unit is equipped with computer-aided testing facilities featuring 50 dedicated testing stations at the IDZ Recruitment and Placement Centre. This facility is operated on a secure network and is also fully accessible for people with disabilities.

Community Outreach and Capacity Building

• The Eastern Cape Department of Education accepted proposals made by HCS to make Career Guidance Outcomes an addition to the existing Life Skills Curriculum forGrades 6 to 8.Appropriate teachingmaterialsweredistributed to pilot schools in Nelson Mandela Bay, teacher trainingwas given, and 500 scholars benefited from thecurriculum being taught. The post-pilot phase intention is to expand the programme to the rural areas of the province in the coming year; and

• The Driver Training Programme assisted 1 249 people toobtaintheirdriver’slicenses,anincreaseof38%fromthe previous year, and achieved full accreditation from the Transport Sector Education and Training Authority (TETA) as a provider of driver training.

Looking Forward

Taking the lead from the CDC’s 2015-2020 strategic direction, HCS is refining aspects of its business model and incomestreams to respond to the organisational strategic imperatives of strategic partnerships, business intelligence and financialsustainability.

The journey of HCS towards financial self-sustainability hasseen its revenue base grow exponentially over the last few years,whileprofitabilityhasalsobeenimprovedthroughafocusoninternalprocessefficiencyandoptimaldesignoffulfilmentstrategies. Having tapped all possible productivity gains from internal process redesign and staff optimisation, HCS now faces diminishing returns. This led to a strategic decision to redesign the business model to become less effort-driven and more system-orientated, and to automate routine processes. The provincial infrastructure labour management system, Ncedo, is afirst-generationexampleofthisshift’simplementation.

Further investments in knowledge management will allow HCS to fully embrace a systems approach, bringing the operational benefitsofsynergywhichshouldthusalsotranslateintogreaterreturns. Through embedding the fulfilment model within aplatform collection of transactional applications, HCS will be able to service a far larger client base, on a range of options,

including a self-service option. As this will drastically reduce the unit’s transactional costs of doing business on such projects, HCS will also be further enabled to offer improved service fees to clients that elect to procure the self-service option with limited support.

To remain relevant, the business model needs constant reinvention. Having spent much of the past decade perfecting labour recruitment and placement solutions for lower skills levels, the addition of the psychometric testing facility and specialist staff will allow HCS to diversify and compete in the higher and more specialised skills’ end of the market. The in-house psychometric facility with its much larger range of instruments, and the capacity to offer a full suite of organisational consultancy services, enable it a competitive advantage.

HCS has developed an organisational consultancy method focused on quantifiable outcomes directly correlated to the

bottom line, and has found clients particularly responsive to this approach, as opposed to standard market offerings focused on “soft”, less tangible, hard-to-quantify outcomes. The reliability oftheinstrument’spredictivecapabilitywassuccessfullyfield-tested with the CDC Finance Division.

The development of the Eastern Cape Occupational Projection System (ECOPS), a labour market intelligence and forecasting system, remains constrained by resources availability. In order to further progress the project and leverage off existing research and development – relating to the national skills forecasting system – HCS partnered with the National Labour Market Intelligence Partnership. It also established a viable partnership with the International Labour Organization which will see the HCSbenefittingfromsignificanttechnicalassistancefromtheinternational community.

EMPLOYMENT FACILITATED BY HCS ON EXISTING PROJECTS

Category Total employment Local employment Percentage local employment

Coega IDZ 3828 3098 81%

Ngqura Port 505 388 77%

DoH (Central): 5 567 4 469 80%

DoH (Western): 1 117 974 87%

DoH (Eastern): 676 502 74%

Total 11 693 9 431 81%

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SKILLS DEVELOPMENT: CDCs Skills Development Centre not only increased the number of people trained in technical and construction skills but also increased its offering from six to eleven courses.


SmmE DEVELOPmENT

Business Overview

SMMEs comprise more than 90% of formal businesses in South Africa, contributing approximately 50% to the country’s GDP and employing approximately 60% of its workforce. Despite being acknowledged locally and globally as the entities holding the keys to economic growth, job creation and poverty alleviation – SMMEs have an exceptionally high failure rate.

SMME failure occurs as a result of a number of factors, often experienced in combination: lack of business management know-how, lackofaccesstofinanceandmarkets,theburdenof and costs of compliance with regulatory red-tape and requirements, among many other hurdles. The National Development Plan sets a target of 90% of employment opportunities being created by SMMEs by 2030. However, continued slow economic growth results in expenditure cuts which ripple down the supply chain and impact negatively on small business growth.

Through its SMME Unit, the CDC focuses its socio-economic development efforts on training, mentoring and capacity-building for SMMEs, with the aim of ensuring that small businesses are equipped to deliver to lead contractors operating in the IDZ and to develop and grow their businesses. The SMME Unit creates value for the CDC through contribution to its mission to manifest as an enabler of socio-economic development, and to create value for SMMEs by supporting the development of sustainable small businesses and increasing their participation in the formal economy.

The unit acts as a voice for small sub-contractors – ensuring that training and mentorship take place and that these SMMEs are not exploited by lead contractors. Facilitators from the unit visit sites weekly in order to monitor compliance and to track the development progress of SMME sub-contractors.

The unit maintains a regularly updated database of SMMEs in order to maintain credibility with and responsiveness to the needs of main contractors.


Target: 35% SmmE participationActual 2013/14 FY: 37.92%Actual 2014/15 FY: 46.17%

In the year under review, the CDC again exceeded its annual SMME participation target of 35% on all contracts awarded, improving from the preceding year’s 37.92% in 2013/14 FY to 46.17% in 2014/15 FY. The Small Business Development Unit monitors compliance with the benchmark target of 35% work/contract allocation to SMMEs on all CDC contracts.

Through the BEE Scorecard Improvement Programme (BEESIP) – which assists 100% black-owned and black women-owned enterprises to achieve B-BBEE Level 1 certification status –in 2014/15 FY, 500 SMMEs were awarded certification: 200inKwaZulu-Natal and 300 in the EasternCape.Of the first100certificatesobtained,65%wereawardedtoblackfemale-owned businesses and 50% to youth start-ups.

The CDC provides the BEESIP programme free of charge to SMMEs as a component of its contribution to local economic empowerment and transformation. Level 1 B-BBEE status enables SMMEs to compete on a more equal footing against larger, better-resourced and more established companies when bidding for public or private sector contracts.

Approximately80SMMEsinNelsonMandelaBayhavebenefitedfrom CDC contracts, with an estimated contract value of R50-million.IntheEasternCapeasawhole,120havebenefited,withan estimated contract value of R400-million.

Looking Forward

The CDC’s broad dedication to sustainability is to ensure that the CDC meets the needs of the present generation without compromising the ability of future generations to meet its own needs. Meaningful transformation and SMME development is an integral part of this journey and the CDC is committed to supporting and enhancing SMME participation in its projects.

DEVELOPMENT, EmPOWERmENT & TRANSfORMATION

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CONSTRUCTIONBOOM:The8300m2 Vector Logistics Cold Storage Warehouse is expected to be operational in early 2015/16 FY. Some SMMEs worked on this project under the guidance of more established contractors.


OUTLOOK

Inthisreportwereviewandbidfarewelltothelastfive-yearrolling strategy and look ahead to the next five years.Theimplementation of the 2008/09 - 2013/14 strategy saw newproduct offering innovations from CDC, and an expanded organisation through other innovative services aligned to social and economic development. This was necessitated by continued grant funding reductions by the dti, which greatly challenged the business model of the CDC.

The change in strategy has resulted in CDC aggressively developing external consultancy businesses, especially the Infrastructure Implementation Programmes, which greatly supported the organisation to generate income and thus move toward sustainability.

External consultancy businesses and programmes have been the main driver in the generation of a consistent increase in revenuecollectionfortheCDCoverthepastfiveyears,withexternal businesses and programmes contributing 64% of the total CDC self-generated revenue. On average, the self-generated revenue has been growing at a rate of 36% year-on-year in the past four years.

Theorganisationdefinedanewfiveyearstrategyfor2014/15-2019/20 with three strategic pillars:

Financial Sustainability; Strategic Partnerships; and Business Intelligence.

fINANCIAL SUSTAINABILITy

The organisation operates in a period characterised by rapid change. Internationally, the dynamics of globalisation cannot be ignored, while the introduction of the SEZ Act locally will have a major impact on CDC in many ways, particularly the funding model.

Thefundamentalchallengeisthatoffinancialself-sustainability.By 2020, CDC must increase revenue to R1.4-billion through the diversificationofclientsandofitsserviceoffering.Essentially,80%ofrevenuewillhavetocomefromIDZ-relatedactivities,and 20% of revenue from other avenues.

IntermsofCDC’sclientdiversificationstrategy,newmarketswill be explored and activated. CDC will look at different sectors of the economy to develop new products and service offerings,butthiscanonlybedonewithsufficientcapacity.

Alternative measures are also being put in place to mitigate the risk of reduced government funding. In this regard, the organisation intends to use its resources and assets productively in order to generate revenue for its financial sustainability,through:

• better corporate governance;• leveraging the capital assets of the IDZ;• obtaining partners to develop the land asset and/or bring

their own customers to set up in the IDZ; and• obtaining funding from alternative sources.

Thisgoalisdirectlylinkedtoclientdiversification;CDCintendsto offer a variety of products and services to be able to operate sustainably. This means modifying current products and services toexpandthemarketpotential.Effectiveproductdiversificationrequires accurate targeting and product differentiation.

The other aspect of organisational self-sustainability is to diminish the dependence on revenue from the External Programme.

At present 70% of the organisation’s revenue resides in project income from its External Programmes. The goal is to shift the balance in the future where R300-million (20%) of revenue will comefromExternalProgrammesandR1.1-billion(80%)fromIDZ-related activities.

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FINANCIAL SUSTAINABILITyMEGA ENERGY PROJECT: Once completed the Dedisa Peaking Power Plant will comprise of Open Cycle Gas Turbines (OCGT) fuelled by diesel operating at a capacity with 342 MW. About 1 350 jobs will have been created during construction and in operation.

1. Increase Revenue2. Customer Diversification3. Manage Funding Risk4. Diversify Products & Services5. Increase Profit6. Assure Return on Investment

7. Reduce Client Turnover8. Ensure Compliance & Governance9. Cost Control10. Improve Productivity

1. Improve Funding Opportunities2. Manage Risk on Project Delivery3. Deliver CSI Projects4. Attaining New Clients5. Attain New Products & Services6. Optimise SMME Development

1. Improve Productivity2. Improve Business Processes3. Profitability Optimisation4. Improve Project Management

BUSINESS INTELLIGENCESTRATEGIC PARTNERSHIPS


1. financial Sustainability2. Strategic Partnerships3. Business Intelligence


STRATEGIC PARTNERSHIPS

Strategic partnershipsopen up a rangeof benefits forCDCand are also aligned to the organisation’s goal of being a catalyst for social development and economic growth. On the one hand,CDCwillbenefitwhenspecialistresourcing,capitalandoperational costs are reduced and when new venture project development risk is shared and distributed, while on the other, the organisation supports the broader goals that address inequality, poverty and unemployment.

The CDC’s partnership oriented strategic approach is founded on securing new funding partners and investors, building public-private partnerships (PPP), introducing concessions, exploring the use of private developers within the Coega IDZ, buildingrelationshipswithutilityfirmstoensureIDZtenantsare advanced and, importantly, a commitment to civil society partnerships. CDC skills development, empowerment and transformationinitiativesbenefitindividualsandcommunities.

The primary goal of industrial development and special economic zones is job creation. A strong focus will be on the promotion of incentives for both local and foreign investors in export industries as well as clients with product lines which focus on import substitution and foreign investors utilising local materialforbeneficiation.Attractionoflocalinvestmentshasalso become a major goal, and the CDC acknowledges this.

ThroughPPPs,specificobjectivesandthemutual interestsofthe state and the commercial sector can be achieved faster andmoreefficiently.PPPinstrumentsthatwillbeintroducedby CDC will ensure that: capital and operational costs are outsourced and shared; accessibility to specialist skills are improved; new clients and markets are opened; special funding becomesmorereadilyaccessible,andoperationalefficienciesbecome more streamlined and honed.

Concessions have become an internationally recognised method of involving private sector operators to perform functions on behalf of state enterprises, and case studies have shown that this process can be effectively implemented in IDZ environments. Concessions will be meticulously planned, managed and monitored by CDC to mitigate the risks of failure as a result of complex issues associated with the processes.

PrivatedevelopersfortheCoegaIDZofferahostofbenefits,including a collaborative private sector property development relationship that will enhance the CDC’s product offering. The private sector can also undertake lease negotiation processes for potential tenants in the Coega IDZ and funding uncertainty, which of jeopardise the location of projects in the IDZ, will be

reduced. Possible barriers that will prohibit the entrenchment of private developers in the Coega IDZ include the IDZ regulatoryframework,therisksandbenefitsofleaseholdandfreehold,andrequirementsbyfinancialinstituteswhichrequiretenancy with a duration of 20 years.

CDC will work closely to build partnerships with utility companies to improve electricity and water supply for Coega IDZ tenants.

To support the transformation, empowerment and development, CDC focus will continue its unwavering commitment to SMME development and CSI programmes.

BUSINESS INTELLIGENCE

CDC will develop and entrench itself in a paradigm of business intelligence over the next five years. Through the BusinessIntelligence Strategy, the CDC sets out to achieve even greater operational efficiencies and organisational successes throughanalytical software tools, business intelligence (BI) suites (SAS and Business Object), and reporting enterprise systems (SAP and Oracle) for monitoring, evaluation and performance measurement.

This will allow CDC management and senior leadership to be responsive with innovations and improvements because of new sources of information, data and intelligence. It will also increase, enhance and deepen their own understanding of the actual status of the organisation, through an objective lens.

CDC will introduce a set of technologies and processes that use data to analyse and interpret business performance. Data, statistical and quantitative analyses, explanatory and predictive models, and fact based management systems offer a new dimension to informed and intelligent decision-making. The involvement of analytics would enhance management decision-making.

The CDC is determined to take full advantage of business intelligence, and the process will be driven and adopted across the entire business.

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PORTFOLIO COMMITTEE VISIT TO COEGA: Joanmariae Fubbs (centre), chairperson of the PC on Trade and Industry (dti) visited Coega Dairy/Cheese in Zone 3 of the Coega IDZ.


CfO’S REVIEW

RevenuegeneratedfromCompanyactivitiesis18%higherthanthe previous year, compared to a 5% increase in Expenditure for the same period.

The implementation of the new funding regime under the SEZ Act saw the dti discontinuing OPEX Grant funding (2014: R160-million) and the resultant 63% decrease in grant funding from the previous year as funding was only made available for Capital Projects.

The efforts of the Company to build a revenue base which will see the Company win off dependence from grant funding are starting to pay off. The ratio of revenue generated to grant funding has improved to 3.6 times (2014:1.1).

Excluding the effect of Project Funds, the average Cash to Creditors ratio decreased to 14% (2014:63%), which means thattheCompanyexperiencedcashflowdifficultiesduringtheyear. We are deeply grateful to our suppliers and customers who as our greatest partners during the year have made the Company to operate and realise its objectives.

The investment of R176-million in Non Current Assets bringing the total value to R4.9-billion gives the Company an excellent base from which future revenue generating efforts can be launched. The Company’s intention to achieve operational break even point within the next strategy cycle is fundamentally pursued and built from this platform.

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SELECT COMMITTEE VISIT TO COEGA: Litho Suka (right), chairperson of the SC on Economic and Business Development, on a show-and-tell walkabout in FAW’s R600-million assembly plant in Zone 2 of the Coega IDZ.

CERTIfICATE By COmPANy SECRETARy

For the year ending 31 March 2015

DeclarationbyCompanySecretary in termsofSection268G (D)of theCompaniesAct. TheCompanyhas lodgedwith theRegistrar all such returns as required of a private company in terms of the Companies Act, and all such returns are true, correct and up-to-date.

………………………………

Fezile Ndema(ACTING) COMPANY SECRETARY


03ANNUAL fINANCIAL STATEmENTS

Investment property is carried at a fair value of

R4.705-million

2014

2015

Department of Economic Affairs, Environment & Tourism ups funding to the CDC and Coega IDz to:

R97-million

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ANNUAL fINANCIAL STATEmENTS

COEGA DEVELOPMENT CORPORATION PROPRIETARy LIMITED

For the year ended 31 March 2015 ThedirectorsarerequiredintermsoftheCompaniesAct71of2008ofSouthAfricatomaintainadequateaccountingrecordsandareresponsibleforthecontentandintegrityofthefinancialstatementsandrelatedfinancialinformationincludedinthisreport.ItistheirresponsibilitytoensurethatthefinancialstatementsfairlypresentthestateofaffairsoftheCompanyasattheendofthefinancialyearandtheresultsofitsoperationsandcashflowsfortheperiodthenended,inconformitywithInternational Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the financialstatements.ThefinancialstatementsarepreparedinaccordancewithInternationalFinancialReportingStandardsandare based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

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

Thefinancialstatementshavebeenpreparedonthegoingconcernbasis,sincethedirectorshaveeveryreasontobelievethatthe Company will continue its operations for the foreseeable future.

TheexternalauditorsareresponsibleforindependentlyreviewingandreportingontheCompany’sfinancialstatements.ThefinancialstatementshavebeenexaminedbytheCompany’sexternalauditorsandtheirreportispresentedonpages100to102.

Approval of the Financial Statements Thefinancialstatementsfortheyearended31March2015assetoutonpages104to131wereapprovedbytheBoardofDirectors and, as authorized, are signed on their behalf by the following directors:

……………………………… ……………………………… Dr P. Jourdan Mr P. SilingaChairperson ChiefExecutiveOfficer

STATEmENT Of DIRECTORS' RESPONSIBILITIES AND APPROVALS

GENERAL INFORMATION

NATURE OF BUSINESS Industrial Development Zone and ServicesAUDITORS Auditor-General BANKERS First National Bank Standard Bank Investec Bank NedbankLOCATION Coega IDZ Business Centre Corner Alcyon Road & Zibuko Street Zone 1, Coega IDZ Port ElizabethPOSTAL ADDRESS Private Bag X6009 Port Elizabeth 6000COUNTRY OFINCORPORATIONAND DOMICILE South AfricaTELEPHONE NUMBER (+27) 41 403 0400FAX NUMBER (+27) 41 403 0401WEBSITE www.coega.co.zaBRANCH OFFICES Durban, East London and Pretoria

Compiled under the supervision/direction of: Bongeka Jojo, CA (SA), ChiefFinancialOfficer

RegistrationNumber1982/003891/07AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015ThesefinancialstatementswillbeauditedincompliancewiththeapplicablerequirementsoftheCompaniesActofSouthAfrica,71of2008andthePublicFinanceManagementAct.bytheAUDITOR-GENERAL OF SOUTH AFRICA, EAST LONDON

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ADDING UP THE NUMBERS: CDC Chief Financial Officer, Bongeka Jojo, said the state entity will break-even by 2018.


COEGA DEVELOPmENT CORPORATION (PTy) LImITED DIRECTORS' REPORT

DIRECTORS' REPORT

Here,thedirectors'presenttheirannualreport,whichformspartofthefinancialstatementsoftheCompanyfortheyearended 31 March 2015:

Main business and activities

The CDC is a licensed developer and operator of the Coega IDZ and has continued to develop the necessary infrastructure and facilities to market the Coega IDZ and the Nelson Mandela Bay Logistics Park to potential investors.

In addition to this, the CDC renders other (non-IDZ) services to customers who are mainly government departments and entities. These include infrastructure project management, human capital solutions and corporate travel services.

General review

Thefinancialstatementsonpages104to131setoutfullythefinancialposition,theresultsofoperationsandthecashflowsof the Company for the year ended 31 March 2015.

During the year under review, the Company focussed on providing infrastructure and facilities for signed investors that will becomeoperationalinthenextfinancialyear.

TheCDC’sportfolioofnon-IDZservicesperformedsteadilyandcontributedsignificantlytotheCompany’srevenue.

No dividends have been declared or recommended (2014: R nil).

Legal framework and compliance

The Coega IDZ was designated by Government Gazette on 1 December 2001, and an Operator permit was issued on 7th August 2007. During May 2015, the SEZ Act was signed into legislation and, in terms of this Act, the CDC is deemed a Special Economic Zone (SEZ) and existing IDZs have three years to fully comply with the requirements of the SEZ Act.

TheCDChascompliedwithalltherelevantlawsandregulationsofthecountry.Thespecificsignificantlawsconsideredrelevantforthereporting period include Manufacturing Development Act, Public Finance Management Act, Companies Act and Preferential Procurement Policy Framework Act.

Non-current assets

Property, plant and equipment at year end is carried at a value of R266-million (2014: R265-million). Additions to PPE during the year amounted to R24-million (2014: R63-million).

Investment property is carried at a fair value of R4.705-million (2014: R4.529-million) after capitalising additional expenditure incurredduringtheyearofR89-million(2014:R245-million)andcapitalworkinprogressadditionsofR86-million(2014:R185-million).

Subsidiaries

During the year, the Company introduced a small Business Finance programme, which will facilitate enterprise development by funding small companies that are doing work on Coega projects. A previously dormant subsidiary company of the CDC was reactivated for this purpose and is in the process of being registered with the National Credit Regulator (NCR) and the Financial Services Board (FSB). The Company has not traded with this subsidiary, pending the conclusion of the registration process.Asaresult,noconsolidatedfinancialstatementwaspreparedfortheyearunderreview.

Funding

During July 2014, the Eastern Cape Department of Economic Affairs, Environment & Tourism approved and paid to the CDC an amount of R97-million (including VAT) (2014: R71.9-million), for payment towards certain capital projects.

The Department of Trade and Industry (dti), through the SEZ Fund, approved funding for multi-year capital projects amounting toR643-million,of this,R250-millionwastransferredtotheCDCduringthefinancialyearunderreview.Nofundingwasapprovedorreceivedforoperationalcostsduringthefinancialyearunderreview.

Going concern

Thefinancialstatementsarepreparedonagoingconcernbasis,asthedirectorsbelievethattheCompanywillcontinuetooperate in the foreseeable future.

The introduction of the SEZ Legislation in May 2014 brought changes in the way that funding to the IDZs (and therefore Coega)isallocated–fromthatofMediumTermExpenditureFramework(MTEF)allocationstospecificproject-basedapprovalsthat will be given from time to time. Further, the Act states that the funding of the operations of the IDZs / SEZs will be the responsibility of the Provincial Government and no longer that of the dti. At the moment, the amount of contribution to the Company’s operations by Provincial Government in terms of this requirement going forward is yet to be determined. It is noteworthy that the CDC operated during the year under review without receiving the envisaged funding for operational expenditure, and sustained operations from the revenues generated by the Company.

Share capital

The authorised share capital had remained unchanged at 31 March 2015.

The Department of Trade and Industry is the Executive Authority in terms of the Public Finance Management Act based on the A-class share, which confers majority voting control. All issued ordinary shares are held by the Eastern Cape Provincial Government through the Eastern Cape Development Corporation (ECDC).

Post balance sheet events

ThedirectorsarenotawareofanymatterthatismaterialtothefinancialaffairsoftheCompanythathasoccurredbetween31March2015andthedateofapprovalofthefinancialstatements,otherthanthosedisclosedinthefinancialstatements.

Directors and Secretary

The following were the directors of the Company for the year under review:

Dr P. Jourdan (Chairperson) J.J. de BruynM.P.Silinga(ChiefExecutiveOfficer) S.ZikodeP.S. Ndoni S. LiebenbergB. Lobishe (appointed 2015) T. Norman (appointed 2015)S. Khan (appointed 2015)

The following were independent non-executive members of the Audit and Risk Committee, and deemed directors in terms of theCompaniesAct71of2008.

A. Mjekula (Chairperson) S. T. ZakuzaN.V. Qangule K. Naidoo

Mr F. Ndema is the Company Secretary.

Auditors

The Auditor-General of South Africa is the independent auditor of the Company.

LEADERSINACCOUNTABILITY:TheCDC’sauditedannualfinancialstatementsareinaccordancewiththerequirementsoftheIFRS,PFMAandtheCompaniesAct.

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REPORT Of THE AUDITOR-GENERAL TO PARLIAmENT ON COEGA DEVELOPmENT CORPORATION (PTy) LTD

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the CoegaDevelopment Corporation set out on pages 104 to 131, whichcomprisethestatementoffinancialpositionasat31March2015,thestatementofprofitorlossandothercomprehensive income, statement of changes in equity, andstatementofcashflowsfortheyearthenended,aswell as thenotes, comprising a summaryof significantaccounting policies and other explanatory information.

BoardofDirectors'responsibilityforthefinancialstatements

2. The Board of Directors, which constitutes the accounting authority, is responsible for the preparation and fair presentationofthesefinancialstatementsinaccordancewith International Financial Reporting Standards (IFRS) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act no. 1 of 1999) (PFMA) and theCompaniesActofSouthAfrica,2008(ActNo.71of2008) and for such internal control as the accountingauthority determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor-general's responsibility

3. My responsibility is to express an opinion on these financialstatementsbasedonmyaudit.Iconductedmyaudit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtainreasonableassuranceaboutwhetherthefinancialstatements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements.Theproceduresselecteddependonthe auditor’s judgment, including the assessment of the risksofmaterialmisstatementofthefinancialstatements,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 overallpresentationofthefinancialstatements.

5. I believe that the audit evidence I have obtained is sufficientandappropriatetoprovideabasisformyauditopinion.

Opinion

6. Inmyopinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCoegaDevelopment Corporation (Pty) Ltd as at 31 March 2015 and its financial performance and cash flows forthe year then ended, in accordance with the IFRS and the requirements of the PFMA and the Companies Act.

Emphasis of matter

7. I draw attention to the matters below. My opinion is not modifiedinrespectofthismatters.

Changes in legislation

8. Asdisclosedinnote19.1tothefinancialstatements,theSpecial Economic Zone (SEZ) Act was promulgated on 19 May 2014 and the regulations that come with the Act arestilltobefinalised.TheActwillsignificantlychangethe institutional structure and the funding model of the entity.

Financial sustainability

9. Note 19.2 to the annual financial statements disclosethat theCompany is facinganumberoffinancial risksthat cast doubt on its ability to sustain its current level ofoperation in thenear future.Thekeyfinancial risksidentifiedinclude:

• an inability to pay creditors within due dates;• negativekeyfinancialratios;and• an inability to obtain funding for its operational

activities.

In addition, the actions taken by management to mitigate the impact of these risks are disclosed in this note.

Restatementofcorrespondingfigures

10. Asdisclosedinnote20tothefinancialstatements,thecorresponding figures for the 2012/13 and 2013/14financialyearshavebeenrestatedasaresultoferrorsdiscoveredduring2014/15inthefinancialstatementsofthe Company at, and for, the years ended 31 March 2013 and 31 March 2014.

Additional matters

11. I draw attention to the matter below. My opinion is not modifiedinrespectofthismatter.

Other reports required by the Companies Act

12. Aspartofourauditofthefinancialstatementsfortheyearended 31 March 2015, I have read the Directors’ Report, the Audit Committee’s Report and Company Secretary’s Certificate to identify whether there are materialinconsistencies between these reports and the audited financialstatements.Thesereportsaretheresponsibilityof the respective preparers. Based on these reports, I havenotidentifiedmaterialinconsistenciesbetweenthereportsandtheauditedfinancialstatementsinrespectof which I have expressed my opinion. I have not audited the reports and accordingly do not express an opinion on them.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

13. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) and the general notice issued in terms thereof, I have a responsibility to report findings on the reported performance informationagainst predetermined objectives for selected objectives presented in the Annual Report, compliance with legislation and internal control. The objective of mytestswastoidentifyreportablefindingsasdescribedunder each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

14. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected performance indicators presented in the Annual Report of the Coega Development Corporation for the year ended 31 March 2015:

• Revenue generated • Number or new investments attracted • Value of investment signed

• Verifiednumberofjobscreated• Number of people trained • Increased SMME share of overall procurement • Number of successful drivers• LevelofannualaccreditationBEEcertificate

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

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

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

18. Thematerialfindingsinrespectoftheselectedobjectivesare as follows:

Usefulness of reported performance information

19. Treasury Regulation 30.1.3(g) requires the Annual Performance Plan to form the basis for the Annual Report, therefore requiring consistency of indicators and targets between planning and reporting documents. Two indicators, relating to the number of internal and external interns, contained in the Annual Performance Plan were not reported on in the Annual Report. Furthermore the key performance indicator relating to the levelof annually accreditedBEEcertificatewasnot included in the Annual Performance Plan. The achievement reported for this performance indicator was verified against the valid annual BEE certification.These inconsistencies were due to limited review and monitoring of the completeness of reporting documents by management.

20. Treasury Regulation 30.1.1 requires the executive authority to approve the Annual Performance Plan. Where this plan has changed during the year due to significant policy or mandate changes, the executiveauthority must approve the updated plan. Changes were made to the target of the value of investments signed as a key performance indicator and reported in the Annual Report, without this change being approved.

21. Ididnotidentifyanymaterialfindingsontheusefulnessand reliability of the reported performance information for the following performance indicators:

INDEPENDENT AUDITOR'S REPORT

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• Revenue generated• Number or new investments attracted• Value of investment signed• Verifiednumberofjobscreated• Number of people trained• Number of successful drivers• LevelofannualaccreditationBEEcertificate

Additional matters

22. I draw attention to the following matters:

Achievement of planned targets

23. Refer to page 16 for information on the achievement of the planned targets for the year. This information should be considered in the context of the material findingsontheusefulnessandreliabilityofthereportedperformance information for the selected objectives reported in paragraph 16 of this report.

Adjustment of material misstatements

24. We identified material misstatements in the AnnualReport, submitted for auditing, on the reported performance information of the SMME procurement objective. As management subsequently corrected the misstatements,wedidnotraiseanymaterialfindingsonthe reliability of the reported performance information.

Compliance with legislation

25. I performed procedures to obtain evidence that the Company had complied with applicable legislation regarding financial matters, financial managementand other related matters. My material findings oncompliancewithspecificmattersinkeylegislation,assetout in the general notice issued in terms of the PAA, are as follows:

Annual Financial Statements and Annual Reports

26. The financial statements submitted for auditing werenotpreparedinaccordancewiththeprescribedfinancialreporting framework and supported by full and proper records as required by section 55(1)(a) and (b) of the PFMA and section 29(1)(a) of the Companies Act. Material misstatements of investment properties, cash and cash equivalents, trade and other payables, direct contract costs and disclosure items identified by theauditors in the submitted financial statements weresubsequently corrected and the supporting records were provided subsequently, resulting in the financialstatementsreceivinganunqualifiedauditopinion.

Expenditure management

27. The accounting records for expenditure were not completeandaccurate,asrequiredbysection28(1)ofthe Companies Act and Companies Regulation 25(3)(c).

Internal control

28. I considered internal control relevant to my audit of the financial statements, performance information andcompliance with legislation. The matters reported below arelimitedtothesignificantinternalcontroldeficienciesthat resulted in material adjustments to the financialstatements,thefindingsontheperformanceinformationincluded in the Annual Report and the findings oncompliance with legislation included in this report.

Leadership

29. The accounting authority did not exercise adequate oversight to ensure compliance with legislation and that the annual financial statements and performanceinformation were free from material misstatements. This was a result of not adequately monitoring the internal control functions and in-year reporting.

Financial and performance management

30. The annual financial statements and performanceinformation submitted for audit were amended due to materialmisstatementsidentified.Thefinancialcontrolsforfinancialstatementpreparationwerenotadequatelyimplemented to ensure that all transactions and balances were accounted for accurately and completely. The controls over daily and monthly processing and reconciling transactions were not adequately monitored during the year. This resulted in material misstatements in thefinancial statementsandperformancereport,aswell as non-compliance with applicable legislation, only beingidentifiedduringtheauditprocess.

Governance

31. The Audit Committee and Internal Audit Unit were functional during the period under review. The Audit and Risk Committee, through the use of internal audits, should ensure that the entity has sound internal controls over financial information, compliance with legislation,and reporting on performance information.

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East London

4 September 2015

DEEPWATER PORT OF NGQURA: Over looking the 12 hectare abnormal cargo storage site, located on the boundary between the Port of Ngqura and the Coega IDZ.


Statement of Financial Position as at 31 March 2015

31-Mar 31-Mar 31-Mar 2015 2014 2013 Notes R’000 R’000 R’000

ASSETS

Non-current assets 4 970 331 4 794 003 4 368 224 Property, plant and equipment 3 265 823 264 684 269 372

Investment properties 4 4 704 509 4 529 319 4 098 852

Current assets 645 138 551 125 768 006 Trade and other receivables 6 140 369 175 524 114 608

Cash and cash equivalents 7 504 769 375 601 653 398

Total assets 5 615 470 5 345 127 5 136 230

EQUITY

Capital and reserves 4 392 318 4 389 422 3 980 984 Share capital 8 7 7 7

Share premium 8 1 264 551 1 264 551 1 264 551

Retained earnings 3 127 761 3 124 864 2 716 426

LIABILITIES

Non-current liabilities 718 989 495 582 520 360 Deferred income 9 294 085 86 842 96 142

Deferred income tax 13 311 422 308 046 313 107

Income received in advance 18 113 482 100 694 111 111

Current liabilities 504 162 460 122 634 886 Trade and other payables 10 466 491 414 431 599 680

Provisions 11 37 671 45 692 35 206

Total liabilities 1 223 151 955 705 1 155 246 Total equity and liabilities 5 615 470 5 345 127 5 136 230

Statement of Profit or Loss and Other Comprehensive Income as at 31 March 2015

31-Mar 31-Mar 2015 2014 Notes R’000 R’000

REVENUE 597 698 747 775 Rental received 4 181 196 127 265 Management fees 16 287 798 268 934 Government grants released to income 9 128 703 351 576

Other income 16 13 548 94 286 Total income 611 246 842 061 EXPENDITURE 611 630 582 737 Administrative expenses 63 620 70 026 Direct contract costs 52 307 61 612 Operating expenses 495 703 451 099

Operating profit / (loss) (383) 259 324 Finance income 16 7 078 10 062 Finance costs 15 (421) - Profit before income tax 6 273 269 386 Tax charge / (credit) 13 3 376 (139 052)Profit for the year 12 2 896 408 438 Other comprehensive income - - Total comprehensive income for the year 2 896 408 438

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STATEMENT Of fINANCIAL POSITION STATEMENT Of COmPREHENSIVE INCOmE


Statement of Cash Flows as at 31 March 2015

31-Mar 31-Mar 2015 2014 Notes R’000 R’000

Cash flows from operating activities Cash receipts from customers 517 697 458 104 Cash paid to contractors and employees (552 427) (773 434)Cash utilised by operations 15 (34 730) (315 330)Interest received 15 7 078 10 062 Interest paid 15 (421) - Net cash outflows from operating activities (28 073) (305 267)

Cash flows from investing activities Capital additions 3+4 (167 881) (532 768)Net cash outflows from investing activities (167 881) (532 768)

Cash flows from financing activities Government grants received 9 335 945 342 276 Cash received in advance - MCS 19 734 -Projects funds (30 557) 217 963 Projects funds received 1 901 881 2 593 419 Projects funds paid (1 932 438) (2 375 456)Net cash inflows from financing activities 325 122 560 239

Net decrease / (increase) in cash and cash equivalents 129 167 (277 796)Cash and cash equivalents at beginning of year 375 602 653 398 Cash and cash equivalents at end of year 7 504 769 375 602

Statement of Changes in Equity as at 31 March 2015

Share

CapitalShare

Premium

Retained Earnings /

(Accumulated Loss)

Total

R’000 R’000 R’000 R’000

Balance at 31 March 2012 7 1 264 551 2 263 851 3 528 409

Total comprehensive income for the year - - 452 575 452 575

Balance at 31 March 2013 7 1 264 551 2 716 426 3 980 984


Balance at 31 March 2014 - Restated 7 1 264 551 3 124 864 4 389 422


Balance at 31 March 2015 7 1 264 551 3 127 761 4 392 319

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STATEMENT Of CHANGES IN EQUITy STATEMENT Of CASH fLOWS


1. ACCOUNTING POLICIES

Theprincipalaccountingpoliciesappliedinthepreparationofthesefinancialstatementsaresetoutbelowandareconsistentwiththoseappliedinthepreviousyear,withtheexceptionofthosesetoutinnote20.Amountsincludedinthesefinancialstatements are rounded to R’000.

1.1 Basis of preparation

ThefinancialstatementsarepreparedinaccordancewithInternationalFinancialReportingStandards(IFRS),thePublicFinanceManagementAct(PFMA)andtheCompaniesActofSouthAfricaNo.71of2008.Thefinancialstatementshavebeenpreparedunderthehistoricalcostconventionasmodifiedbytherevaluationofinvestmentproperty,whichiscarriedatfairvalue.Thefinancialstatementsarepreparedontheaccrualbasisexceptforcashflowinformation.

ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates.Italsorequires management to exercise judgment in the process of applying the Company’s accounting policies. The areas involving a higherdegreeofjudgmentorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialstatements,are disclosed in Note 1.02.

a) Interpretations to existing standards effective in 2014 that are not relevant to the Company

* IFRS2:Share-basedPayment:-Amendmentsresulting fromAnnual Improvements2010-2012Cycle(definitionof‘vestingcondition’).

* IFRS 3: Business Combinations:- Amendments resulting from Annual Improvements 2010-2012 Cycle (accounting for contingent consideration).

* IFRS 3: Business Combinations:- Amendments resulting from Annual Improvements 2011-2013 Cycle (scope exception for joint ventures).

*IFRS8:OperatingSegments:-AmendmentsresultingfromAnnualImprovements2010-2012Cycle(aggregationofsegments,reconciliation of segment assets).

* IAS 39: Financial Instruments:- Recognition and Measurement: Amendments for novations of derivatives.

* IAS19: EmployeeBenefits:-Thenarrowscope amendments apply to contributions fromemployeesor thirdparties todefinedbenefitplans.Theobjectiveoftheamendmentsistosimplifytheaccountingforcontributionsthatareindependentofthenumberofyearsofemployeeservice, forexample,employeecontributionsthatarecalculatedaccordingtoafixedpercentage of salary.

*IAS38:IntangibleAssets:-AmendmentsresultingfromAnnualImprovements2010-2012Cycle(proportionaterestatementof accumulated depreciation on revaluation).

* IFRS 13: Fair Value Measurement:- Amendments resulting from Annual Improvements 2011-2013 Cycle (scope of the portfolio exception in paragraph 52).

* IAS 40: Investment Property:- Amendments resulting from Annual Improvements 2011-2013 Cycle (interrelationship between IFRS 3 and IAS 40).

b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company

* IFRS 9: Financial Instruments:- Reissue of a complete standard with all the chapters incorporated.

c) Standards, amendments and interpretations to existing standards that are not yet effective and are not relevant for the Company’s operations

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Company’s accounting periods beginning on or after 31 December 2016 or later periods but are not relevant for the Company’s operations:

* IFRS 1: First-time Adoption of International Financial Reporting Standards:- Amendments resulting from 2012-2014 Annual Improvements Cycle.

* IFRS 5: Non-current Assets Held for Sale and Discontinued Operations:- Amendments resulting from 2012-2014 Annual Improvements Cycle.

* IFRS 11: Joint Arrangements:- Amendment requiring the acquirer of an interest in a joint operation in which the activity constitutesabusiness,asdefinedinIFRS3BusinessCombinations,toapplyalloftheprinciplesonbusinesscombinationsaccounting in IFRS 3.

*IAS38:IntangibleAssets:- Amendmentsresultingfromclarificationofacceptablemethodsofdepreciationandamortisation(AmendmentstoIAS16andIAS38).

* IAS 41: Agriculture:- Amendments to include ‘bearer plants’ within the scope of IAS 16 rather than IAS 41.

* IFRS 10: Consolidated Financial Statements:- Amendments on Sale or Contribution of Assets between an investor and its associate or joint venture.

* IFRS 10: Consolidated Financial Statements:- Amendments related to the application of the investment entities exceptions.

* IFRS 12: Disclosure of Interests in Other Entities:- Amendments related to the application of the investment entities exceptions.

* IFRS 14: Regulatory Deferral Accounts.

* IFRS 15: Revenue from contracts with customers.

* IFRS 7: Financial Instruments:- Disclosures: Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures.

* IFRS 7: Financial Instruments:- Disclosures: Amendments resulting from September 2014 Annual Improvements to IFRSs.

1.2 Critical estimates and judgments

ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

TheCompanyappliesjudgmentandmakesestimatesinrespectofthefollowingsignificantareas:

Capitalisation of infrastructure costs

Management applies judgment in assessing whether infrastructure will be controlled by the Company and whether future economicbenefitsareexpectedtoflowtotheCompanyindeterminingwhethercostsincurredoninfrastructureshouldbecapitalised as assets.

Trade and other receivables

Management applies judgment in assessing the carrying value of trade receivables, at each reporting date. In determining whether an impairment loss shouldbe recorded in profitor loss, theCompanymakes judgment as towhether there isobservabledataindicatingameasurabledecreaseintheestimatedfuturecashflowsfromtradeandotherreceivables.Theestimate of the recoverable amount is reviewed annually and on an individual basis. The adjustments are charged to the statementofcomprehensiveincomeduringthefinancialperiodinwhichtheyareincurred.

For the year ended 31 March 2015

NOTES TO THE fINANCIAL STATEmENTS

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Useful lives of infrastructure and other assets

Management determines the estimated useful lives and related depreciation charges for its depreciable assets . These estimates are based on management’s experience, knowledge and current expectations. The annual depreciation charge will be adjusted for any changes in these estimates. Impairment of assets

Management applies judgment in assessing whether capitalised assets need to be impaired. The carrying value of property plantandequipmentisimpairedwhenthefutureeconomicbenefitsthatareexpectedtoflowtotheCompanyarenegativelyaffected by changes in circumstances. Impairment judgment of capitalised assets is based on calculations of the higher of value in use and fair value less costs to sell.

Fair values

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date determines fair value. Where applicable, further information about the assumptions madeindeterminingfairvaluesisdisclosedinthenotesspecifictothatassetorliability.

Expected manner of realisation for deferred tax

Deferred taxation is accounted for using the balance sheet liability method in respect of temporary differences arising from the carryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationof taxableprofit. Ingeneral,deferred tax liabilitiesarerecognised forall taxable temporarydifferencesanddeferred taxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitwillbeavailable,againstwhichdeductibletemporarydifferences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability settled. The Company has adhered to the amendment to the measurement principle in IAS 12 in the form of a rebuttable presumption that assumes that the carrying amount of investment property measured at fair value will be recovered through sale.

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 dealt with in equity.

Taxes

Judgment is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillimpact the income tax and deferred tax provisions in the period in which such determination is made.

TheCompanyrecognisesthenetfuturetaxbenefitrelatedtodeferredincometaxassetstotheextentthatitisprobablethatthe deductible temporary differences will reverse in the foreseeable future.

Assessingtherecoverabilityofdeferred incometaxassetsrequirestheCompanytomakesignificantestimatesrelatedtoexpectationsoffuturetaxableincome.Estimatesoffuturetaxableincomearebasedonforecastcashflowsfromoperationsandtheapplicationofexistingtaxlawsineachjurisdiction.Totheextentthatfuturecashflowsandtaxableincomediffersignificantly fromestimates, theabilityof theCompany torealise thenetdeferred taxassetsrecordedat theendof thereporting period could not be impacted.

1.3 Property, plant and equipment

The cost of property, plant and equipment is recognised as an asset if and only if:(a)itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheentity;(b) the cost of the item can be measured reliably.

Buildings,infrastructure,motorvehicles,equipment,furnitureandfittingsareinitiallystatedashistoricalcost.Costincludesallcosts directly attributable to bringing the assets to working condition for their intended use. Subsequent to initial measurement, property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. The estimated useful

lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The change is accounted for as a change in accounting estimate in accordance withIAS8.

Infrastructuralexpenditure,forwhichthereisnoexpectedfutureeconomicbenefit,iswrittenoffintheyeartheexpenditureisincurred.

Landisstatedatcostandnotdepreciatedasitisdeemedtohaveanindefinitelife.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheCompanyandthecostoftheitemcanbemeasured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged tothestatementofcomprehensiveincomeduringthefinancialperiodinwhichtheyareincurred.

Depreciation

Depreciation is calculated on the straight-line method to write off the cost of assets to their residual values over their estimated useful lives. The depreciation charge for each period is recognised in the statement of comprehensive income.

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

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised with other (losses) / gains - net, in the statement of comprehensive income.

1.4 Investment properties

TheCDCclassifiesasinvestmentpropertiesallpropertiesheldtoearnrentalincomeand/orcapitalappreciationthatarenotoccupied by the CDC.

Investment property is recognised as an asset if and only if:(a)itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheentity;(b) the cost of the investment property can be measured reliably.

Investment properties are measured initially at cost, including transaction costs . Subsequent to initial measurement, investment properties are measured at fair value.

Investment properties that are being developed for continuing use as investment property are measured at fair value.

Propertylocatedonlandthatisheldunderalong-termoperatingleaseandissub-lettothirdpartiesisclassifiedasinvestmentproperty as long as it is held for long-term rental yields and is not occupied by the CDC.

Fairvalueadjustmentsoninvestmentpropertiesareincludedinprofitorlossinthestatementofcomprehensiveincomeasnet fair value gains (or loss) on assets.

1.5 Impairment of assets

Assetsthathaveanindefiniteusefullife,forexample,land,arenotsubjecttoamortisationandaretestedannuallyforimpairment.Assets that are subject to amortisation are reviewed for impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for

The estimated useful lives of the main asset categories are as follows:

Buildings 25 years

Motor vehicles 5 years

Equipment 2 - 6 years

Furniture and fittings 6 years

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the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’sfairvaluelesscoststosellandvalueinuse.Animpairmentlossisrecognisedimmediatelyinprofitorloss.

Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).Non-financialassets,otherthangoodwill,thatpreviouslysufferedimpairmentarereviewedfor possible reversal of the impairment at each reporting date.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. Areversalofanimpairmentlossisrecognisedimmediatelyinprofitorloss,unlesstherelevantassetiscarriedatrevaluedamount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6 Leases, operating leases and lessor

Operating lease - lessor

Leaseswhereasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the basis of the lease income. Rental from operating leases is recognised on a straight line basis over the term of the lease. The difference between the amounts recognised as income and the contractual payments is recognised as an operating lease asset or liability. Income for leases is disclosed under revenue in the statement of comprehensive income.

Operating lease – lessee

Operating lease payments are recognised as an expense on a straight line basis over the lease terms. The difference between the amounts recognised as an expense and the contractual payments is recognised as an operating lease asset or liability. Such amounts are not discounted. Any contingent rents are expensed in the period in which they are incurred.

1.7 Financial instruments

Theentityclassifiesfinancialassetsandliabilitiesintothefollowingcategories:(a) loan and receivables; (b)financialliabilitiesmeasuredatamortisedcost.

(a) Financial assets

Financialassetscarriedatthestatementoffinancialpositiondateincludecash,cashequivalents,tradeandotherreceivables.FinancialassetsareinitiallyrecognisedwhentheCompanyhasrightsoraccesstotheireconomicbenefits.Suchassetsconsistofcash,acontractualrighttoreceivecashoranotherfinancialasset.Financialassetsareinitiallymeasuredatfairvalue,whichincludes transaction costs. Subsequent to initial recognition these instruments are measured as set out below:

Derecognisation

Financial assetsarederecognisedwhen therights toreceivecashflows fromthe investmentshaveexpiredorhavebeentransferred and the Company has transferred substantially all risks and rewards of ownership.

Loans and receivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theyare included incurrentassets,except formaturitiesgreaterthan12monthsafterthestatementoffinancialpositiondate.Theseareclassifiedasnon-currentassets. TheCompany’s loansandreceivablescomprise‘tradeandotherreceivables’andcashandcashequivalentsinthestatementoffinancialposition(note5,6and7).

Trade and other receivables

Trade and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due to it according to the original terms of thereceivables.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancial

reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value ofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.Theamountofthelossisrecognisedinthestatement of comprehensive income. When a trade receivable is uncollectible, it is written off against the provision for trade receivables.

Subsequent recoveries of amounts previously written off are credited in the statement of comprehensive income. Trade and otherreceivablesareclassifiedasloansandreceivables. Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held on call with banks, other short term highly liquid investments whicharereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.Theseareinitially and subsequently recorded at fair value.

Impairmentoffinancialassets

TheCompanyassessesateachStatementoffinancialpositiondatewhetherthereisobjectiveevidencethatafinancialassetoragroupoffinancialassetsisimpaired.

(b) Financial liabilities

Financial liabilities consist of trade and other payables. Financial liabilities are recognised when there is an obligation to transferbenefitsandthatobligationisacontractualliabilitytodelivercashoranotherfinancialassetortoexchangefinancialinstruments with another entity on potentially unfavourable terms.

Trade and other payables

Trade and other payables are carried at the fair value of the consideration to be paid in future for goods or services that have been received or supplied and invoiced or formally agreed with the supplier and are subsequently measured at amortised costs, using the effective interest rate method.

1.8 Share capital and equity

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

1.9 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Government grants relating to costs are deferred and released to the statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the acquisition of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the statement of comprehensive income on a straight-line basis over the expected lives of the related assets. Government grants relating to investment property are released to the income statement in the period in which they are received.

Grantsnotspecificallyrelatedtoassetsorcostsareappliedfirsttoassetsandthentocostsandarerecognisedassetoutabove.

1.10 Provisions, contingent liabilities and contingent assets

Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is probablethatanoutflowofresourceswillberequiredtosettletheobligation;andtheamounthasbeenreliablyestimated.Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expectedtoberequiredtosettletheobligationusingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheobligation.Theincreaseintheprovisionduetopassageoftimeisrecognisedasinterestexpense.

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Contingent liabilities

Contingencies recognised in the year under review required estimates and judgments.

Contingentliabilitiesarepossibleobligationsthatarisefrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent liabilities are not recognised but are disclosed in the notes to achieve fair presentation. Contingent assets

Contingentassetsaredisclosedwhereaninflowofeconomicbenefitsisprobable.Whentherealisationofincomeisvirtuallycertain, then the related asset is not a contingent asset and its recognition is appropriate. Related parties

Parties are considered to be related to the CDC either if one party, directly or indirectly, has the ability to control or jointly controlorexercisesignificantinfluenceovertheotherpartyinmakingfinancialandoperationaldecisionsorisamemberofthe key management of the CDC. For details of related parties refer to note 14.

1.11 Revenue recognition

Revenue comprises government grants, interest income, rental income and income from project management services. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that the future economic benefitswill flow to theentity and specificcriteriahavebeenmet foreachof theactivitiesdescribedbelow.Revenue ismeasured at the fair value of the consideration received or receivable and represents the amounts receivable for services provided in the normal course of business, net of trade discounts, volume rebates and Value Added Tax. Any amount actually received but not qualifying as revenue earned is recognised as income received in advance.

(a) Governmentgrants(refernote1.8)

(b) Interest received – Interest is recognised in the statement of comprehensive income using the effective interest rate method.

(c) Rent received – Rental income is recognised on a straight-line basis over the period of the rental agreement.

(d) Management fees – Revenue from the provision of project management services are recognised in the period in which the services have been rendered by reference to the stage of completion of the transaction at the balance sheet date.

1.12 Current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financialpositiondate.

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. Current and deferredtaxisrecognisedasincomeoranexpenseandincludedinprofitorlossfortheperiod,excepttotheextentthatthe tax arises from: (a) a transactionor eventwhich is recognised, in the sameor a different period, outside profitor loss, either inother

comprehensive income or directly in equity; or (b) a business combination.

Currenttaxanddeferredtaxisrecognisedoutsideprofitorlossifthetaxrelatestoitemsthatarerecognised,inthesameoradifferentperiod,outsideprofitorloss.Therefore,currenttaxanddeferredtaxthatrelatestoitemsthatarerecognised,in the same or different period:

(a) in other comprehensive income, is recognised in other comprehensive income; (b) directly in equity, is recognised directly in equity.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assetsandliabilitiesandtheircarryingamountsinthefinancialstatements.However,deferredincometaxisnotaccounted

for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the timeofthetransaction,doesnotaffecteitheraccountingortaxableprofitorloss.Deferredincometaxisdeterminedusingtax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferredincometaxassetsarerecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailable,thatthe temporary difference is controlled by the Company and that it is probable that the temporary difference can be utilised.

1.13 Employee benefits

(a) Leave

Employee entitlements to annual leave are recognised when they accrue to the employees. An accrual limited to 30 days is madefortheestimatedliabilityforannualleaveuptothestatementoffinancialpositiondate.

(b)Definedcontributionplan

TheCompanyoperatesadefinedcontributionprovidentplan forallemployees.TheCompanyhasno legalorconstructiveobligation to pay further contributions beyond those already paid. Contributions are recognised as an expense when it falls due.

(c) Medical aid

The Company makes a limited contribution towards employee medical costs. The Company has no legal or constructive obligationtopayfurthercontributionsbeyondtheagreedlimits.TheCompanydoesnotprovideanymedicalaidbenefitsafter retirement.

(d) Performance incentive

The Company recognises a liability and an expense for bonuses, based on a formula that takes into consideration the performance of the individual. The Company recognises an accrual where contractually obliged or where there is a past practice that has created a constructive obligation.

Allemployeebenefitsarerecognisedinthestatementofcomprehensiveincomewhentheyaredue.

1.14 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:

- Actualborrowingcostsonfundsspecificallyborrowedforthepurposeofobtainingaqualifyingassetlessanytemporaryinvestment of those borrowings. The borrowing costs capitalised must not exceed the total borrowing costs incurred.

- The capitalisation of borrowing costs commences when: - expenditures for the asset have occurred; - borrowing costs have been incurred; and - activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

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

1.15 Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economicenvironment in which the entity operates (“the functional currency”), namely South African Rands (R).

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2. fINANCIAL RISk mANAGEmENT

2.1 Financial risk factors

TheCompany’sactivitiesexpose it toavarietyoffinancialrisks:marketrisk(includingcashflowandinterestraterisk),credit risk and liquidity risk. This note presents information about the Company’s exposure to each of the above risks, as well as the Company’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures areincludedthroughoutthesefinancialstatements.

The Board is ultimately responsible and accountable for ensuring that adequate procedures and processes are in place to identify, assess, manage and monitor key business risks. The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the Company’s risk management policies.

The Audit and Risk Committee oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The committee is assisted in this regard by the internal audit department. The internal audit department undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk Committee.

(a) Interest rate risk

As theCompany has no significant interest-bearing assets,the Company’s income and operating cash flows are notsubstantially dependent on changes in market interest rates.

(b) Credit risk

Creditriskistheriskoffinancial losstotheCompanyifacustomerorcounterpartytoafinancial instrumentfailstomeet its contractual obligations.

Financial assets, which potentially subject the Company to a concentration of credit risk, consist principally of cash andcashequivalents,anddepositswithbanksandfinancialinstitutions, as well as credit exposures to customers.

Management has a credit and investment policy in place and the exposure to risk is monitored on an ongoing basis.

The Company’s cash is placed with major South African financial institutions of high credit standing andwithin thespecific guidelines. Consequently, the Company does notconsidertheretobeanysignificantexposuretocreditrisk.

Potential concentrations of credit risk consist mainly within trade receivables. Trade receivables comprise rentals, rental deposits, rental guarantees and contract cost recoveries. Ongoing credit evaluations are performedon the financialposition of these debtors. Trade debtors are presented net of the impairment provision. Impairment losses are recorded intheallowanceaccountuntiltheCompanyissatisfiedthatno recovery of the amount is possible, at which point the amount is considered irrecoverable and is written off against thefinancialassetdirectly.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of sufficient funding. Inorder to ensure sufficient liquidity, spending plans aremonitored continually and adjusted to available funding.

The Company’s financial liabilities comprise only of tradeand other payables. The amounts disclosed on the statement offinancialpositionare thecontractualundiscountedcashflowsandareallduewithina12monthperiod.

2.2 Capital risk management

The Company’s objective is to maintain a strong capital base soas tomaintain investor,creditorandmarketconfidenceand to sustain future development of the business. This includes restricting contractual commitments to available funding. Capital consists of total equity and grant funding received.

The Company has no externally imposed capital requirements.

TheregisteroflandandbuildingsisopenforinspectionattheregisteredofficeoftheCompany.Therearenorestrictionsontitle, and property, plant and equipment pledged as security for liabilities. There is no expenditure recognised in the carrying amount of any item of property, plant and equipment which is still under construction. Contractual commitments for the acquisition of property, plant and equipment are disclosed in note 17.1.

TheregisteroflandandbuildingsisopenforinspectionattheregisteredofficeoftheCompany.

Land Buildings Capital Work

in Progress Motor

Vehicles Equipment

Furniture & Fittings

Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 Year ended 31 March 2015 Opening net book amount 28 550 195 888 - 25 379 9 644 5 223 264 685 Additions - 881 - 8 277 6 915 7 528 23 601 Disposals - - - - - - - Depreciation - (9 056) - (6 349) (5 996) (1 060) (22 461)Transfer from work in progress - - - - - - - Closing Carrying Value 28 550 187 713 - 27 307 10 563 11 691 265 823 As at 31 March 2015 Cost 28 550 247 359 - 42 631 116 592 25 651 460 783 Accumulated depreciation - (59 646) - (15 324) (106 029) (13 960) (194 959)Closing Carrying Value 28 550 187 713 - 27 307 10 563 11 691 265 823

Land Buildings Capital Work

in Progress Motor

Vehicles Equipment

Furniture & Fittings

Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 Year ended 31 March 2014 Opening net book amount 28 550 157 473 57 011 11 526 9 652 5 160 269 372 Additions - 35 582 - 18 593 7 872 1 241 63 288 Disposals - - - - - - - Depreciation - (9 221) - (4 740) (7 880) (1 178) (23 019)Transfer from work in progress - 12 054 (57 011) - - - (44 957)Closing Carrying Value 28 550 195 888 - 25 379 9 644 5 223 264 684 As at 31 March 2014Cost 28 550 246 478 - 34 354 109 677 18 123 437 182 Accumulated depreciation - (50 590) - (8 976) (100 033) (12 900) (172 499)Closing Carrying Value 28 550 195 888 - 25 379 9 644 5 223 264 684 Associated deferred income from government grants (refer note 9)

- 77 542 - - 9 300 - 86 842

3. PROPERTy, PLANT AND EQUIPmENT

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fINANCIAL RISk mANAGEmENT


2015 2014 2013R’000 R’000 R’000

Beginning of the year 4 529 319 4 098 852 3 302 762 Additions 89 473 200 099 46 721 Transfer from property, plant and equipment - 44 957 - Capital work in progress 85 717 185 411 91 352 Fair value (loss) / gains - - 658 018 End of the year 4 704 509 4 529 319 4 098 852

The Company’s investment properties, comprising the Construction Village, Commercial Centre, tenanted properties, Developed Zones and Logistics Park, were last valued on 31 March 2013 by independent external valuers, Robert Edelson (Summerton Edelson Commercial CC) & Graham Boyd (Boyd Valuations (Pty) Ltd), both registered as Professional Valuers in terms of Section 22 of the Property Valuers Profession Act, 2000 (No. 47 of 2000). Management has reviewed the valuation for the current year and has taken into consideration the valuation that took place in the prior year in arriving at the fair value for investment property.

The individual land components within Zones 1 to 5 have been based on fully serviced land and leasehold improvements. Zone 6 was valued based on partially serviced land. Zones 7 - 14 were based on bulk land, except for improvements to Cerebos and Electrawinds. The Logistics Park was valued as leasehold land. The Construction Village valuations were based on fully serviced land and improvements.

Tenantedpropertieswerevaluedintermsoftheinvestmentmethod/incomeapproachorusingadiscountedcashflow.TheConstructionVillage has been valued using the comparable sales approach and the Commercial Centre on the depreciated replacement cost method. Serviced and bulk land were valued using the comparable sales approach.

The accounting policies for financial instruments have been applied to the line items below:

2015 2014 2013 R’000 R’000 R’000Assets Loans and receivablesTrade and other receivables 140 369 175 524 114 608 Cash and cash equivalents 504 769 375 601 653 398

645 138 551 125 768 006 LiabilitiesOther financial liabilitiesTrade and other payables (excluding Value Added Tax) 466 491 414 431 597 637

466 491 414 431 597 637

The fair values of all items are represented by their carrying amount as they are all due within a 12 month period, thereby rendering the effect of discounting immaterial.

Creditqualityoffinancialassets

The Company’s customers included in trade and other receivables comprise amounts due from tenants, state-funded entities and other related parties. In determining the recoverability of trade receivables, the CDC considers any change in the credit quality of trade receivables from the date that credit was initially granted up to the end of the reporting period.

5. fINANCIAL INSTRUmENTS By CATEGORy

Movement in the allowance for doubtful debts

2015

R'0002014

R'0002013

R'000Balance at the beginning of the year 35 311 20 289 13 949 Impairment losses recognised on receivables (reversed) (21 486) 15 022 6 340 Balance at the end of the year 13 825 35 311 20 289

Age of receivables that are past due but not impaired 60 - 90 days - - 4 019 90 days + - 26 909 39 717

All cash at bank and short-term deposits are with reputable AA-rated institutions.The short term investments have an original maturity of three months or less.

Maturityanalysisoffinancialliabilities

The trade and other payables are due and payable within 12 months from the balance sheet date. The balances might be affected by interest charged by suppliers if payment terms are extended.

The following amounts have been recognised in the income statement:2015

R'0002014

R'0002013

R'000Rental income 181 196 127 265 104 787 Direct operating expenses that generated rental income 68 250 77 598 70 934

4. INVESTmENT PROPERTIES

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2015 2014 2014

R’000 R’000 R’000

Trade receivables 38 679 39 239 27 252

Receivables from government departments 78 019 106 918 92 974

SA Revenue Services - VAT 9 876 14 751 -

Other receivables 27 620 49 927 14 671

154 195 210 835 134 897 Less: Provision for impairment (13 825) (35 311) (20 289)

140 369 175 524 114 608

Receivable balances are considered for impairment on an individual basis. Receivables that were past due at year-end have had a provisionforimpairmentofR13.8-million(2014:R35.3-million)raisedagainstthem.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Company holds security in the form of limited rental deposits and guarantees does not hold any security in respect of other receivables.

2015 2014 2013 R’000 R’000 R’000 Cash at bank and on hand 26 146 110 123 113 768 Cash at bank - Departmental Project Funds 274 738 221 519 308 227 Short term bank deposits 203 884 43 958 231 403 504 769 375 601 653 398

7. CASH AND CASH EQUIVALENTS

8. SHARE CAPITAL AND SHARE PREmIUm

ThebankandcashbalancesaboveincludefundsheldthatarenotavailabletotheCDC,amountingtoR220-million.R208-millionof this are the SEZ Funds, earmarked for special projects, and the corresponding liability is disclosed as deferred grant income. The balance of R17-million is deposits held on behalf of investors. The balance also includes cash balances held for government departments amounting to R275-million.

Guarantees held at banks are listed under note 17.5.

Number of Shares Par Value Rands Share Premium

Rands Total Rands Authorised 1 000 000 ordinary shares of 1 cent each 1 000 000 10 000 - 10 000 1 “A” Class share of R1 each 1 1 - 1 1 000 001 10 001 - 10 001 IssuedOrdinary shares 1 “A” Class share 1 1 At the beginning of year 683 733 6 838 1 264 550 726 1 264 557 564 Total share capital at the end of the year 683 734 6 839 1 264 550 726 1 264 557 564

6. TRADE AND OTHER RECEIVABLES

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2015R’000

2014 R’000

2013 R’000

Government grants At beginning of the year 86 842 96 142 105 442 Grants received during the year 335 945 342 276 382 332 Released to income (128 703) (351 576) (391 632)- to offset costs - (160 380) (164 962)- against investment properties (85 088) (181 896) (217 370)- against depreciation (9 300) (9 300) (9 300)- SEZ Projetcs (34 315) - - 294 084 86 842 96 142 At end of the year - to be released / offset within one year 9 300 9 300 9 300 - to be released / offset beyond one year 284 784 77 542 86 842 294 084 86 842 96 142

Grantsreceivedduringthefinancialyearhavebeendisclosedinnote14.

Funding of R250-million was received from the SEZ Fund, R34-million of which was utilised / paid out during the year. The unused portionofR216-millionisdeferredtothenextfinancialyearasthefundingisringfencedforspecificprojects.TheCDCmaynotuse the funding other than as directed in the approvals.

2015 R'000

2014 R'000

2013 R'000

Trade payables 91 447 111 702 145 303 SA Revenue Services - Income tax - - 21 684 SA Revenue Services - VAT - - 2 043 SA Revenue Services - Additional tax relating to prior year assessments - - 112 306

Other payables 31 644 84 785 10 118 Other payables - Projects 343 400 217 943 308 226 466 491 414 431 599 680

10. TRADE AND OTHER PAyABLES

Included in the accounts payable balance at year-end are amounts received and held in separate bank accounts from the government clientdepartmentsforthepurposeofcarryingoutspecificprojects.Thebreakdownofbankbalancesatyear-endaredetailedinNote 14.

9. DEfERRED INCOmE


Opening Balance Additions Utilised during the year Total

Reconciliations of provisions - 2015 Provision for leave pay 12 143 18 369 (15 517) 14 996 Provision for performance incentives 33 548 29 337 (40 210) 22 675 45 692 47 707 (55 727) 37 671 Reconciliations of provisions - 2014 Provision for leave pay 10 328 12 143 (10 328) 12 143 Provision for performance incentives 24 878 33 548 (24 878) 33 548 35 206 45 692 (35 206) 45 692

For the year is arrived at After Charging / (Crediting) the following: 2015

R’0002014

R’0002013

R’000

Depreciation Annual charge - Note 3 22 461 23 019 21 470 Fair value loss / (gain) - Note 4 - - (658 018)Repairs and maintenance 13 293 14 283 17 999 Operating lease rentals - Office buildings 3 344 3 662 4 303 - Office equipment 969 1 726 1 152 4 313 5 389 5 455 Auditors’ remuneration - Audit fee - current year 756 557 511 - Factual finding on dti quarterly reports - 60 98 - Report on performance information - - 25 756 617 634

11. PROVISIONS

12. NET PROfIT / (LOSS)

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Salary & Benefits

Fees Total

Cost to Company

Total Cost to

Company

Total Cost to

Company 2015 2014 2013 R’000 R’000 R’000 R’000 R’000 Directors’ Remuneration

J de Bruyn * # - 200 200 122 158

Dr P Jourdan ** - 184 184 149 280

P Ndoni - 207 207 58 101

N Magwentshu - - - 14 72

NV Qangule # - 53 53 33 48

ST Zakuza # - 80 80 33 48

A Mjekula # - 145 145 47 48

S Zikode - - - - -

S Liebenberg - 138 138 69 -

M Silinga *** 3 885 - 3 885 6 194 5 051

T Norman - 29 29 - -

S Khan - - - - -

B Lobishe - - - - -

K Naidoo # - - - - -

3 885 1 036 4 921 6 719 5 806

* Chairman of the Human Resources and Remuneration Sub-committee of the Board

** Chairman of the Board of Directors

*** Chief Executive Officer

# Member of the Audit & Risk Committee (deemed directors in terms of Companies Act, 2008)

Salary

Retirement Benefit and Medical Aid

Accrual for Performance

Incentive

Total Cost to Company



2015 2014 2013 R’000 R’000 R’000 R’000 R’000 R’000 Executive Management and Programme Directors 26 572 2 910 - 29 481 30 907 24 303

Other employees 180 288 17 947 - 198 235 176 917 138 372

206 860 20 856 - 227 716 207 825 162 674

2015 2014 2013

Number of persons employed by the Company at year-end (excluding interns). The number is made up of 372 (2014:199) fixed-term contract employees and 192 (2014:191) permanent staff members.

564 390 312

Directors’ Remuneration

Employee Costs

remuneration of directors and Executives

The remuneration of the CDC Directors and Sub-committee Members is determined through the application of the Remuneration Guidelines issued by the Department of Public Enterprises (DPE) for the Chairpersons and the Non-Executive Directors of State Owned Enterprises (SOEs).

The fees payable to non-executive Directors and Sub-committee members are reviewed periodically based on a benchmarking process undertaken by an external remuneration consultant. Non-executive Directors and Sub-committee members receive standard fees with no additional performance bonus.

The remuneration philosophy of the CDC’s executives and employees differentiates in remuneration on the basis of individual competencies, performance, relevant work experience, and contribution to the business objectives; whilst maintaining a fair and competitive remuneration structure aligned to market trends.

Remuneration is benchmarked against a market survey conducted by an external remuneration consultant and subject to approval by the Human Resources and Remuneration Committee of the Board. The performance incentives framework for executives is based on the Remuneration Guidelines issued by DPE for SOEs.


2015R’000

2014R’000

2013R’000

Current tax - current year - (21 684) 21 684

Current tax - prior years - (112 306) 112 306

Deferred tax 3 376 (5 062) 260 622

Tax charge 3 376 (139 052) 394 612

The Company has an estimated assessed loss at year-end, available for set off against future taxable income, amounting to:

- - (228 399)

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows. Company tax has been calculated based on trading income.

Profit / (loss) before tax 6 273 104 286 847 188

Tax calculated at a rate of 28% 1 756 29 200 237 213

Income not taxable (36 037) (98 441) (60 864)

Expenses not deductible for tax purposes 37 657 64 179 29 264

Non-deductible permanent difference on building depreciation - - 2 200

Permanent difference on investment property fair value adjustment - - (61 415)

(Reversal) / Additional Tax charge relating to prior year assessments - (133 990) 112 306

Reversal of tax losses available for set off against future taxable income - - 135 908

Tax charge 3 376 (139 052) 394 612

Deferred income taxes are calculated on all temporary differences under the liability method using a tax rate of 28%. Deferred tax in investment property has been calculated at 18.6%.

2015R’000

2014R’000

2013R’000

Provisions and non-deductible accruals (11 474) (13 635) (8 575)

Depreciation and wear and tear 1 157 - -

Fair value adjustment 321 739 321 681 321 681

Deferred tax liability 311 422 308 046 313 107

Reconciliation of deferred tax liability

2015R’000

2014R’000

2013R’000

At beginning of the year (308 046) (313 107) (52 484)

Originating temporary difference on revaluation of property - - (123 540)

(Decrease) / Increase in tax losses available for set off against future taxable income

- - (135 908)

Increase in provisions (3 376) 5 061 (1 174)

At the end of the year (311 422) (308 046) (313 107)

The Department of Trade and Industry is the Executive Authority in terms of the PFMA based on the A-class share, which confers majority voting control. All issued ordinary shares are held by the Eastern Cape Provincial Government through the Eastern Cape Development Corporation. Grants received from government during the year are fully disclosed in note 9. There were no further transactions with related parties during the year other than those disclosed in this note. Details regarding directors’ emoluments and key management compensation are disclosed in note 12.

Details of transactions and balances with government departments during the FY are set out below:

Project funds received from government, included in trade and other payables (note 10).

Opening Balance

Funds Received

Payments Made (including

management fees, bank charges)

Closing Balance

2015

Closing Balance

2014

Client Department R’000 R’000 R’000 R’000 R’000

Department of Roads and Public Works 35 427 52 339 (79 680) 8 086 35 427

Chris Hani District Municipality 2 176 1 601 (3 697) 80 2 176

Accelerated and Shared Growth Initiative for South Africa 2 682 177 (724) 2 135 2 682

Department of Human Settlements 8 719 65 153 (69 495) 4 377 8 719

Department of Education Eastern Cape 9 657 186 637 (195 757) 537 9 657

Department of Basic Education Programme 2 087 104 832 (106 919) - 2 087

Department of Sports, Recreation, Arts & Culture 4 611 8 646 (11 110) 2 147 4 611

Department of Environmental Affairs and Tourism 480 - - 480 480

Sector Education and Training Authority 110 - - 110 110

Office of the Premier 135 - - 135 135

Department of Health Eastern Cape 59 819 870 142 (916 659) 13 302 59 819

National Department of Health - 29 862 (15 602) 14 260 -

Department of Economic Development, Environmental Affairs and Tourism (PTIP) * - 153 000 (58 167) 94 833 -

ASIDI - KZN 44 856 - (38 980) 5 876 44 856

Department of Social Development - KZN 6 265 1 606 (7 859) 12 6 265

Department of Education - KZN - 427 886 (427 789) 97 -

177 025 1 901 881 (1 932 438) 146 468 177 025

* The project funding allocated for these projects was R250-million. The department arranged for R97-million of this amount to be allocated to CDC as a grant. Refer to note 14.

2015R’000

2014 R’000

2013 R’000Grants received during the year:

Department of Trade and Industry 250 857 270 346 366 542

Department of Economic Affairs, Environment & Tourism 85 088 71 930 15 789

335 945 342 276 382 331

13. TAXATION AND DEfERRED TAXATION 14. RELATED PARTy TRANSACTIONS

14.1 material Balances with government departments

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Significant outstanding debtors’ balances recoverable from government client departments

2014R’000

2013R’000

Department of Education (Eastern Cape) 7 452 7 735

Department of Education (KwaZulu-Natal) 6 262 38 044

Department of Economic Affairs, Environment & Tourism 1 854 3 926

Department of Health (Eastern Cape) 48 229 27 376

Department of Roads and Public Works 3 594 20 747

Department of Sports, Recreation, Arts & Culture 166 455

Eastern Cape Legislature 3 994 5 650

Department of Human Settlement 4 904 2 973

Eastern Cape Development Corporation - 12

Department of Social Development 1 564 -

78 019 106 918

The Company undertakes contracts on an ‘arm’s length’ basis with the government departments listed above.

Reconciliation of net profit / (loss) to cash utilised by operations:

Note:2015

R’000 2014

R’000 2013

R’000

Net profit for the year 6 273 269 386 847 188

Adjusted for: - - -

Depreciation 3 22 461 23 019 21 470

Fair value adjustment on investment property 4 - - (658 018)

Interest received (7 078) (10 062) (14 093)

Interest paid 421 - 86

Government grants released to income 9 (128 703) (351 576) (391 632)

Changes in working capital - - -

Decrease / (increase) in trade and other receivables 6 35 155 (60 915) (69 860)

Decrease / (increase) in trade and other payables 52 060 (185 250) 113 359

Decrease / (increase) in provisions (8 020) 10 486 6

Lease smoothing 3 119 - -

Income received in advance released to income (10 417) (10 417) -

(34 730) (315 330) (151 494)

Revenue from continuing operations is earned through rentals from investment properties (disclosed in note 4) as well as from provision of management services. Revenue-earning management services include travel management services, infrastructure programme management services as well as consulting services.

16.1 finance Income

2015R’000

2014 R’000

2013 R’000

Management fees 287 798 268 934 201 644

Other income 13 548 94 286 8 057

301 347 363 220 209 701

2015R’000

2014 R’000

2013 R’000

Interest received on positive bank balances and short-term investments 3 279 10 062 14 093

Finance income arising from financial assets measured at fair value 3 799 - -

7 078 10 062 14 093

SignificantelementsofOtherIncomeincluderecoveriesfromsettlementagreementwiththeconstructioncompanieswhen the CDC claimed for losses related to tender rigging against these companies (R12.5-million).

Inadditiontotheabove,anamountofR3.8-millionrecognisedasfinanceincomearisesfromthemeasurementoffinancialassets(AccountsReceivable)atfairvalue.

16. REVENUE

15. CASH UTILISED By OPERATIONS

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Due within 1 year:

Due within 2 to 5 years:

Expenditure contracted for at the balance sheet date but not yet expended is as follows:

The price of certain land acquired in the Coega Industrial Development Zone is subject to arbitration. The dispute is between Ntinga Property Investment (Pty) Ltd and CDC. The dispute arises out of a sale agreement entered into between Ntinga (the seller) and Coega (the purchaser) in respect of certain immovable property as well as the purchase and sale of mineral rights on the property and the mining license in relation to such mining rights. The matter was referred to arbitration as provided by the sale agreement. The claimant has not taken any further steps to pursue the matter. The matter is therefore dormant at this stage. Management’s assessment of the case is that the matter will nothaveanimpactontheannualfinancialstatements.

AnauditofIncomeTaxwasconductedbySARSduringthe2013financialyear,whichconcludedthatthetreatmentofgovernment grants received by the CDC as exempt from Income Tax was incorrect. Assessments were issued for the financialyearof2007to2011foradditionaltaxofR322-millionandimposedinterestandpenalties.TheCDCobjectedto the appeal during May 2014. The objection was concluded favourably, the previous assessments were revised and theliabilityclaimedwasreducedtoR18-million,withpenaltiesandinterestswaived.TheCDCacceptedthedecisionby SARS but appealed against computation errors on the revised assessment, which resulted from incorrect treatment of certain expenses. The CDC awaits the outcome of this appeal, and the resultant refund of the R15-million paid in March 2013 on initial conclusion of the audit, which is yet to be refunded by SARS.

Following an audit, SARS raised an assessment requiring payment of tax of R53-million on the basis that the transaction in which CDC sold rental streams to Souvaris properties in order to fund infrastructure during 2012/13 FY amounted to a lease premium in terms of the Income Tax Act. The CDC has objected to this assessment and has consulted widely andisconfidentthatthiswillbeconcludedinfavouroftheCDC.

The CDC holds guarantees amounting to R765 000 with First National Bank, issued in favour of International Air Transport Association, the licensing authority for the Company’s travel licence. The guarantees do not have a maturity date. In addition, the CDC has credit card facilities with a combined limit of R350 000, petrol cards to the value of R190 000 held with Wesbank, and a Diners Club Card.

2015R’000

2014 R’000

2013 R’000

On 8 December 2010, CDC concluded a 12-year agreement with Souvaris in respect of the General Motors South Africa property. Effectively, CDC has ceded, assigned its rights, title and obligations in the GMSA lease to Souvaris. Souvaris in return paid an amount of R125-million to CDC, which represents future rentals.

93 748 100 694 111 111

On 1 February 2015, CDC concluded a 50-year agreement with MSC, who made an upfront payment of R19.8-million for the land lease contract in the IDZ.

19 734 - -

113 482 100 694 111 111

2015R’000

2014 R’000

2013 R’000

Operating lease commitments – Property 478 1 560 2 047

Operating lease commitments – Office equipment 1 453 793 1 539

1 931 2 353 3 586

2015R’000

2014 R’000

2014 R’000

Operating lease commitments – Property - 546 2 106

Operating lease commitments – Office equipment 800 201 880

800 747 2 986

2015R’000

2014 R’000

2013 R’000

Goods and Services including capital expenditure 235 712 111 638 171 800

235 712 111 638 171 800

In order to meet the commitments to two investors, the CDC concluded agreements with construction companies to develop warehouses required by investors for occupation during June 2015. In terms of these agreements, the CDC is required to settle full construction costs at the time of handing over the facilities.

The CDC has applied for funding of these two projects from the dti, and awaits the outcome of this funding application, whichhadnotbeenconfirmedatyear-end.

17. COmmITmENTS AND CONTINGENT LIABILITIES

17.1 Contracts awarded

17.3.1 land arbitrations

17.2 Other commitments

17.3 Contingent liabilities

17.3.2 SArS tax liabilities

17.4 Guarantees and other credit facilities

18. INCOmE RECEIVED IN ADVANCE

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2015R’000

2014 R’000

2013 R’000

The CDC had claims by various third parties arising from contractual disputes that are still unresolved. The outcome of these claims could not be reliably assessed at year-end.

23 508 12 509 19 577


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The Company changed and corrected its presentation and disclosure of funds held on behalf of client depatments. Previously, the funding received, project bank accounts, and the work-in-progress were aggregated and netted off against each other in the disclosure in the financial statements.During the year, theCompany discontinued theoffsetting of the bank account balances and included these project bank account balances as cash and cash equivalents onthestatementoffinancialposition.

ThiswasdonetocomplywithIAS1,whichprohibitstheoffsettingofbalancesalthoughspecificallyallowedbyanotherIFRS Standard. The effect of the above is that:

The Company corrected and changed its accounting policy, which previously allowed the write-off of Infrastructure Developmentexpenditure,onthebasisthatitwasdifficulttoconfirmfutureeconomicbenefitsattributabletotheexpenditure.

During the year under review, the Company changed this policy and capitalised such infrastructure in order to fully comply with IAS 40 - Investment Property. The effect of the change or correction to the accounting policy is as follows:

Thefinancialstatementshavebeenupdatedtoincludethefollowingchangesthatresultedfrom:

Thefinancialstatementsarepreparedonagoingconcernbasis,asthedirectorsbelievethatthecompanywillcontinueto operate in the foreseeable future.

The introduction of the SEZ Legislation in May 2014 brought changes in the way that funding to the IDZs, and therefore Coega,isallocated–fromthatofMTEFallocationstospecificproject-basedapprovals,whichwillbegivenfromtimeto time. Further, the Act states that the funding of the operations of the IDZs / SEZs will be the responsibility of the Provincial Government and no longer that of the dti. At the moment, the amount of contribution to the Company’s operations by Provincial Government in terms of this requirement going forward is yet to be determined.

Asaresultofthechangesinthefundingarrangements,someoftheCompany’skeyfinancialratioshavedeterioatedincomparisontothepreviousyears.TheseincludetheCompany’sreportedprofitandcashflowsfromoperations,aswellascreditors’paymentdaysandavailablecashbalances.Forthefirsttimeinitshistory,theCDCoperatedduringthe year under review without receiving the envisaged funding for OPEX, and sustained operations from the revenues generated by theCompany.Managementmaintains detailed financial plans and forecasting processes andmanagesworking capital elements as necessary to ensure that key operations of the business are fully delivered. The provision of the necessary funding for the CDC has been discussed with the shareholders and is receiving attention at the highest level.

The change in the prior-period investment property balance related to the capitalisation of bulk infrastructure expenditure per note 20.2 above, which was previously expensed throught the statement of comprehensive income.

2015R’000

2014 R’000

2013 R’000

Cash and cash equivalents 274 738 221 519 308 227

Trade and other payables (274 738) (221 519) (308 227)

2014 R’000

2013 R’000

Direct contract costs (159 005) -

Income tax - -

Net profit after tax 159 005 -

Deferred tax - -

Investment property (WIP) (159 005) -

2014 R’000

2013 R’000

Balance as previously reported - 31 March 2014 4 370 314 -

Amounts previously expensed that should have been capitalised 159 005 -

Revised balance 31 March 2014 4 529 319 -

2014 R’000

2013 R’000

Operating expenses (6 095) -

Income tax - -

Net profit after tax 6 095 -

Deferred tax - -

19. GOING CONCERNS

20. PRIOR PERIOD ERRORS

20.3 Investment property

20.4 Clearing account20.1 Offsetting of project funds

19.1 Changes to legislation

19.2 financial sustainability

20.2 Capitalisation of bulk infrastructure

The adjustment reported as prior-period error related to the writing-off of balances representing uncleared payments from the previous year that were incorrectly carried as creditors (liabilities) and not reversed. These amounts were written off in the year under review to correct the clearing account.


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19REVENUE GENERATED

19 INVESTORS SIGNED

14 765JOBS CREATED

COEGA

fOCUSSING ON SUSTAINABILITy

A D M I N I S T R A T I O N


SUSTAINABILITY

INTRODUCTION

The CDC develops and manages a world-class SEZ for preferred investors by implementing infrastructure projects and providing topstructurestofulfilltheirrequirements.Inaddition,theCDCalso acts as the Implementing Agent for a number of external programmes on behalf of national and provincial government. As such, the CDC, through the wide scope of its corporate strategy, enhances the socio-economic capacity of the Eastern Cape and the country as a whole, while enabling tenants to meet their economic objectives in a socially, environmentally and economically sustainable manner.

TheCDChas identifiedtheneedtoensurethatthecurrentsustainability initiatives that are undertaken expand and migrate in a holistic formal manner. As such, the focus is on the triple context – the socio-economic context, natural environment and financial stability.Additional sustainable practices, proceduresand policies need to be adopted and integrated into the decision-making processes as the basis for all the decisions affecting inter alia, CDC tenants, suppliers, surrounding communities, local business and CDC stakeholders. In this regard, decisions focus on long-term value and are based on prudent consideration of:

• Social sustainability: Maintaining mutually beneficialrelationships with employees, customers and the community.These activitiesoftenhavebenefits in termsof a positive profile, customer and community supportthrough, for example, eradicating or alleviating poverty;

• Environmental sustainability: The impact of resource usage and the responsibility towards preserving and conserving the natural environment. These activities may haveadirectbenefitforabusinessbyreducingcosts;and

• Economic sustainability:Businessefficiency,productivity,profitbymeansofincorporatingsustainabilityissuesintothe return on investment and operational functionality.

In summary, short- and long-term consequences will be considered in all of these areas in decision-making processes. As such, the highest level of ethics and governance in respect of all decision-making and implementation processes will be practiced. Efforts to continuously monitor and improve on the effectiveness of our sustainability management systems and positive social, economic and environmental performance will be a cornerstone for the way that the CDC conducts its business.

Energy

The CDC has adopted the objectives of ISO 50001 – Energy Efficiency.ThisISOStandardoutlinesbothshort-andlong-termmeasures that are put in place to reduce the energy use carbon footprint, with the objective of reducing the impact on global warming.TheCDCisbecomingmoreenergyefficientandan

added advantage has been the reduction of ever-increasing costs of primary energy and resultant increasing cost to consumers of electricity supplies. The organisation has recently implemented ISO 50001, which will allow it to do the following:

• Fix targets and objectives to meet the policy;• Use data to better understand and make decisions about

energy use;• Measure the results;• Review how well the policy works; and• Continually improve energy management.

Water

Itisanticipatedthattherewillbesignificantdemandforindustrialquality water in the SEZ, as the SEZ becomes progressively populated by various industries, particularly heavy industry. The establishment of a reliable and sustainable supply of industrial quality water for the Coega SEZ is of utmost economic and environmental importance and key in attracting development and sustaining the marketability of the Coega SEZ to investors, particularly large consumers of water. As such, the use of recycled water – return effluent – is also an environmentalcondition prescribed by the DEDEAT to key industries within the SEZ.

Thefirstphaseof thereturneffluent supply isbasedon theNMBM providing Category 4 industrial process water at Fish Water Flats Waste Water Treatment Works in Port Elizabeth. The process of achieving Category 4 return effluent entailsconverting the current activated sludge process at Fish Water Flats Waste Water Treatment Works into a Membrane Biological Reactor (MBR) system. A MBR system will provide at least Category 4 industrial quality water. The value of the NMBMprojectwillbeseenthroughthereturneffluentwatersupply scheme and will provide a secure supply of industrial water to the Coega SEZ, thus allowing the CDC to attract new and service current investors that require Category 4 industrialwaterfortheirprocesses.Thereturneffluentsupplyto the Coega SEZ is aligned with the organisation’s strategic objectives and will allow for the following:

Financial sustainability and growth

The development of the return effluent supply facility willgenerate revenue for the Coega SEZ. This revenue will contribute towards the future financial sustainability of theorganisation.

Preferred investment destination

It isconsideredthatthereturneffluentwatersupplyschemeinvestment will contribute to the CDC’s commercialisation initiative,byprovidingtherequiredreturneffluenttoinvestors.

Advance socio-economic development and transformation in the Eastern Cape

Itisenvisagedthattheinvestmentwillcreateanadditional180permanentjobopportunitieswithinthereturneffluentwatersupply facility. Further jobs prospects will be forthcoming by way of attracted investors due to the availability of utilities such asthereturneffluentwatersupply.

Water quality

To minimise and mitigate impacts on the environment, the CDC monitors ground and surface water within the Coega SEZ. A water monitoring programme has been adopted and a baseline water quality study was initiated in 1999 to establish background hydro-chemical and sediment chemistry data for reference purposes. Initially, the programme was set to establish baselineconcentrationsforspecificpollutantsinsurfacewater,groundwater and sediment quality. The work was undertaken to ensure that an essential and reliable database of background information was available for future reference if pollution shouldbeidentified.

Air quality

The CDC has three air quality monitoring stations strategically positioned in the SEZ. This allows the CDC to keep track of air quality in the SEZ thus ensuring compliance with legislative requirements.

Maintaining this monitoring programme will enable the CDC to create an air dispersion model where the cumulative impacts of emissions can be monitored. This allows for the effective management of the available air space in the Coega SEZ. In addition, the CDC can effectively plan which types of industries can be accommodated in future, using the dispersion model, without exceeding air quality requirements as legally required.

Natural environment – Open Space and Biodiversity

The Open Space Management Plan (OSMP) sets out the uses of the open space areas within the Coega SEZ. It is a mandatory requirement in terms of the legislative framework applicable to the Coega SEZ. Since the establishment of the Coega SEZ, theOSMPhasevolved,asreflectedinthevariousstudiesandauthorisations which have accompanied the development and planning of the zone.

The process has included consultations with institutions such as the CDC, the NMBM, WESSA, the CDC’s Environmental Control Officer, representatives of the DEA, the DEDEAT,Environmental Affairs and Tourism, TNPA, DWA and SANParks.

The primary objectives for developing an OSMP for the Coega SEZ were to:

• Promote preservation of the environment where natural systemsand/orspecifichabitatsrequireit;

• Manage and preserve the cultural resources within the open spaces of Coega SEZ;

• Manage and preserve land for its aesthetic or passive recreational value, for active recreational use, and for its contribution to the quality of life of the concessionaires, tenants and the public;

• Meet recreation space demands as well as provide natural amenities for the SEZ working population;

• Ensure proper management of open space areas;• Ensure that linkages to neighbouring open space areas are

maintained; • Address the social and cultural needs of workers and

families if and where desired;• Promote educational opportunities within the SEZ and

enhance the level of environmental awareness of the workers within the SEZ; and

• Improve environmental quality by means of development guidelines to ensure that the Coega SEZ can compete with other alternative locations on a global scale.

The key objectives for OSPM are:

• Develop an integrated open space system that takes account of activities and opportunities on adjacent and private properties, properties owned by NMBM, and the NMBM’s Open Spaces;

• Convey information on the Management Guidelines as they affect the activities of the open space system to all contractors, concessionaires, tenants, employees and other members of the public to ensure that all comply with the OSMP principles;

• Prioritise the management and removal of alien plant species within the Coega SEZ;

• Prohibit activities likely to impact negatively on open space such as illegal dumping, bush fires and clearing ofvegetation beyond approved areas; and

• Enforce rules and regulations governing use and protection of open space.

Biodiversity protection and management is an important focal area for the CDC and much of the local ecology, especially endemicfaunaandflora,makesconservationandmanagementof biodiversity a critically important objective. A number of policies and procedures and EIA requirements are in place to eliminate or mitigate negative impacts on biodiversity due to infrastructure development and tenant activities within the SEZ.

As such, the CDC established a plant nursery for the safe-keeping of rescued plants from the SEZ, until they are required for landscaping of areas within the SEZ.

The nursery is located in the Coega SEZ. The CDC’s alien vegetation clearing programme continues successfully, with numerous SMME’s employed during the programme. In excess of 650 ha was cleared of aliens in the 2013/14 FY.

Corporate Social Investment

The pillar of social sustainability is upheld through the work of the CDC CSR policy. The CSR strategy is informed by policy and the objectives outlined by the ISO 26000 objectives and focus areas as per the NDP 2030. Accordingly, the impacts of its

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decisions and activities on society and the environment at large that contribute to sustainable development are also taken into consideration. Decisions are made in line with expectations of stakeholders, compliance with the law and international norms of transparent and ethical behaviour.Some of the successful projects CDC is currently rolling out include:

• The Maths and Science Academy; • CDC Mobile Laboratory; • DisabilityAffirmationProgramme;and• The Driver Training Programme.

Integrated Management System (IMS)

The purpose of the CDC’s IMS is to support the business so that processes, services and systems consistently and effectively meet customer expectations, applicable regulatory legal requirements as well as the provision of mechanisms for continual improvement.The organisation is certified in ISO9001 Quality; OHSAS 18001 Health and Safety; ISO 14001Environmental as an Integrated Management System.

Environmental, quality and occupational health and safety management systems are fundamental tools of corporate management; the maintenance of these standards by the CDC demonstrates acceptance of responsibility, and the intention to prevent the waste of resources. The standards provide a solid foundation to enable the CDC to stand the test of time and the challenges of the marketplace. The principles incorporated in the standards assist in involving and uniting employees in working towards a shared goal. It is a source of employee pride and provides a competitive marketing and sales edge.

BenefitsofanIntegratedManagementSystem:

• Facilitating better decision making by providing a more complete view of the impact of the quality, environmental and occupational health and safety programmes on business performance;

• Identifying areas where there may be overlapping responsibilities or duplication of effort;

• Helping to develop objectives and plans that are not competing or contradictory, and are consistent with business needs;

• Allowing better planning and allocation of available resources,leadingtoimprovedworkflowandoperationalefficiencies;

• Promoting harmonized methods and processes for the overall ‘business management’ system;

• Reducing the amount of documentation, providing all relevant information in one place, resulting in happier employees who are not overwhelmed by multiple cross-references;

• Raising awareness of and promoting the interaction and interrelation of Quality, Environmental and Health and Safety systems within the organisation’s operational and business processes;

• Facilitating the development of coordinated solutions to problemsidentifiedindifferentworkareas;

• Promoting a more business focused approach to the audit process; and

• Consolidating audit results for all the management systems.

The CDC is not limited to these ISO standards and objectives. There are a number of additional ISO and SANS standards which CDC has adopted, these include but are not limited to:

• SANS 16001 Wellness and Disease Management (incl. HIV & TB);• ISO 27001 Information Security; and• ISO28000PhysicalandEnvironmentalSecurity.

Sustainable Building Standards

The CDC’s Design Review Committee reviews all Site Development Plans for projects in the Coega SEZ as a means of complying with SANS 10400 – Building Regulations. As such, the CDC follows a formal approval process for meeting its legal obligations in ensuring legal requirements for building standards. In addition, the CDC subscribes to the principles of the Green Building Council of South Africa (GBCSA) which ensures that CDC’s buildings not only meet legal requirements but allows forinnovativedesignstobeproducedthatimproveefficiency.Through CDC’s membership of the GBCSA, the organisation can improve:

• Sustainability: Green building practices play a significantrole in embedding sustainability into businesses’ strategic imperatives and long-term focus; and

• Competitive edge: The organisation will receive priority support in the use of Green Star SA tools and practical ways to build better and greener.

Labour practices and decent work

As a government entity, CDC’s labour practices are in compliance with the government regulations and guidelines, however in most instances morality and ethical principles become a guiding point. The guidelines of the Tripartite Declaration and ILO Declaration on fundamental principles and Rights at Work are embedded on the CDC’s employment practices, training, condition of work and industrial relations.

CDC’s primary mandate to attract investors to the SEZ is gaining momentum and it further extends its scope to operate in the social and economic globalised environment. International benchmarking provides a platform to assess whether the CDC’s practices compete globally. Due to the political and economic situations of the provinces in which the CDC operates, promotion of the principles of the MNE Declaration are internalised in all the processes.

Unacceptable forms of work

Special attention is given to unacceptable forms of work such as child labour and forced labour. The Labour Relations Act, which governsemploymentrelations,isprescriptiveonthedefinitionof an employee and his other rights. It further stipulates the

elimination of discrimination at work, both for applicants and existing employees. Such guidelines are depicted in recruitment and selection policies and practices.

Employee participation

There is a general culture of employee participation and consultation, with information sharing on the Company’s strategic direction and objectives. Participation of employees is promoted in various business forums where deliberations on operational and strategic issues take place. Employee opinion and ideas are taken into consideration.

Grievance and disciplinary procedures

Grievance and disciplinary procedures are in place to ensure that the rights of employees are protected during conflictmanagement and disciplinary issues. The compensation structures for each job level and the determination of the level of the position results in employees being compensated fortheworktheydoandbenefitsareclassifiedaccordingtothe nature of the contract. Conditions of employment are in line with the prescripts of the basic conditions of employment act and discrimination on compensation is prohibited. Income differentials are based on different job roles as opposed to gender and race.

Good Labour Practice (GLP)

GLP guidelines are promoted through the accessibility of training programmes to enhance employees’ skills and knowledge. Training and development is encouraged and is compulsory for each employee through the personal development plan and non-participation is penalized. CDC prides itself as a learning organisation that believes in continuous improvement in as far as career development is concerned. The Skills Development Act regulates the training and development of employees and is in alignment with SAQA standards to ensure that quality and credible training is maintained.

Employment Equity Act

The Employment Equity Act promotes equal opportunity in terms of employment and racial and gender representation at all job levels. It further seeks to ensure that people with disabilities are integrated into the economic mainstream.

Diversity and Equal Opportunity

The CDC recognises that its rich diversity is its source of strength. The organisation recognises the importance of the employee aspects of diversity and is completely conscious that all employees bring their own unique capabilities, experiences and characteristics to their work environment. The CDC’s commitment of complying with its legal obligations under the Employment Equity Act (1998) and the Broad-BasedBlack Economic Empowerment Act (2003) as well as industry commitment in the Services Sector has been maintained. The CDC further promotes the equality of opportunity and actively

values diversity as a core part of its strategic aims as well as its day-to-day business management practices. The representation of females at leadership levels is improving at a rapid pace and employment of people with disabilities has exceeded the target of 2%. Additions to the current initiatives as illustrated above areplannedforthe2014/15financialyear.

CSI Projects

The following projects represent CSI focus of IR:

• Re-establishing a CDC SEZ nursery with a Green Eco School for the local primary school youth;

• Improved SEZ waste management; • Including electronic equipment waste; and • Recycling.

CDCSustainabilitySpecifications

These will be based on best practice, ISO standards and objectives, Corporate Governance King III, Integrated Reporting Principles, PMFA guidelines/requirements, National Development Plan, relevant Legal requirements and the Constitution of South Africa.

Coega SEZ Sustainability Reporting GRI 4

Sustainability reporting is about standard, structure and substance. A corporate sustainability report is a specificdocument resulting from a predetermined reporting process, which reflects on performance indicators alignedwith the organisation. As such, the disclosure on economic, environmental and social performance has become as common andcomparableasfinancialreportingasitisequallyimportantto CDC’s corporate success. The main goal of the global reporting initiative (GRI 4) is to create conditions for the transparent and reliable exchange of sustainability information through the development and continual improvement of the sustainability reporting framework. Hence the CDC has embarked on a Sustainability Reporting System, which will be updatedelectronicallyonamonthlybasisforthenextfinancialyear (2014/15). Future CDC sustainability reports will contain the categories, aspects and performance indicators of the GRI 4. The GRI 4 sustainability reporting process is an ongoing cycle of engagement to understand, debate, measure and improve internal processes and to monitor and communicate performance through the organisational sustainability report. It is a report about economic, environmental and social impacts caused by an organisation through the activities of an organisation in an attempt to reach their performance objectives.

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IRS ICT, Research and StrategyITC International Institute for Aerospace Survey and Earth SciencesKPI’s Key Performance IndicatorsKZN KwaZulu-NatalLEP Local Empowerment ParticipationLLB Bachelor of LawLRU Legal and Risk UnitMBSA Mercedes Benz South AfricaMBA Master of Business AdministrationMBL Master of Business LeadershipMBSA Manufacturing Board of South AfricaMDP Management Development ProgrammeMSc. Master of ScienceMDB Manufacturing Development BoardMNE Multinational Enterprises and Social PolicyMVA Manufacturing Value AddMW Mega WattsNAPDI Northern Areas People Development InitiativeNDBE National Department of Basic EducationN-DoH National Department of HealthN-DoT National Department of TransportNIASA Nuclear Industry Association of South AfricaNMB Nelson Mandela BayNMBLP Nelson Mandela Bay Logistics ParkNMBM Nelson Mandela Bay MunicipalityNMMU Nelson Mandela Metropolitan UniversityNQF NationalQualificationsFrameworkNSF National Skills FundOEM Original Equipment ManufacturerOps Operations - a BU of the CDCOSISC One Stop Investor Service CentreOSMP Open Space Management PlanOTP OfficeofthePremierPCC Port Consultative CommitteesPCS Payment Communication SystemPDOT Provincial Department of TransportPFMA Public Finance Management ActPGDS Provincial Growth and Development StrategyPFMA Public Finance Management ActPhD. Doctor of PhilosophyPIMS Project Information Management SystemPPM Preventative Planned MaintenancePr. Eng. Professional EngineerPRS Project Registration SystemRE ReturnEffluentREDP Roads Enterprise Development ProgrammeREIPPPP Renewable Energy Independent Power Producer Procurement ProgrammeRIC Recruitment and Information CentreROI Return on InvestmentRU Rhodes UniversitySA South AfricaSAAE South African Academy of EngineersSAICA South African Institute of Chartered AccountantsSAMSA South African Maritime Safety AuthoritySANDF South African National Defence ForceSanparks South African National ParksSANRAL South African National Roads Agency LimitedSARS South African Revenue ServiceSCM Supply Chain ManagementSDI Spatial Development InitiativeSDP Site Development PlansSDU Spatial Development UnitSEDA Small Enterprise Development AgencySET Science, Engineering and TechnologySETA Sector Education and Training AuthoritySEZ Special Economic ZoneSLA Service Level AgreementSHEQ Safety, Health and Environmental QualitySHEQMS Safety, Health and Environmental Quality Management SystemsSMME Small, Micro and Medium EnterprisesSOE State-Owned EnterpriseSSU Strategic Services UnitTASA Tooling Association of South AfricaTEE Tyre Energy Extraction (SA)TFR Transnet Freight RailTNPA Transnet National Ports AuthorityTPT Transnet Port TerminalsUCT University of Cape TownUFH University of Fort HareUK United KingdomUNECA United Nations Economic Commission for AfricaUnisa University of South AfricaVWSA Volkswagen South AfricaWSU Walter Sisulu UniversityWEO Women Empowered OrganisationZAR South African Rands

ABASA Association for the Advancement of Black Accountants of South AfricaARC Audit and Risk CommitteeAMP Advanced Management ProgrammeAsgiSA Accelerated and Shared Growth-South AfricaASIDI Accelerated Schools Infrastructure Delivery InitiativeBA Bachelor of ArtsB-BBEE Broad-Based Black Economic EmpowermentBCom Bachelor of CommerceBD Business Development - a BU of the CDCBPO Business Process OutsourcingBSc. Bachelor of ScienceBU Business UnitCA (SA) Chartered Accountant of South AfricaCCA Customs Controlled AreaCCT Coega Corporate TravelCDA Core Development AreaCDC Coega Development Corporation (Pty) LtdCDC-S Coega Development Corporation ServicesCEO ChiefExecutiveOfficerCETA Construction Education and Training AuthorityCHC Community Health CentreCHDM Chris Hani District MunicipalityCIDB Construction Industry Development BoardCFO ChiefFinancialOfficerCoE Centre of ExcellenceCMMS Computerized Maintenance Management SystemCSI Corporate Social InvestmentCSIR CouncilforScientificandIndustrialResearchCSS Central Support ServicesDBE Department of Basic EducationDEDEAT Department of Economic Development, Environmental Affairs & TourismDES Desired End StateDFP Development Framework PlanDRDLR Department of Rural Development and Land ReformDoE Department of EducationDoH Department of HealthDoHS Department of Human SettlementsDSRAC Department of Sport, Recreation, Arts and CultureDRPW Department of Roads and Public Worksthe dti Department of Trade and IndustryDWA Department of Water AffairsEA Environmental AuthorisationEC Eastern CapeECDC Eastern Cape Development CorporationEC-DoH Eastern Cape Department of HealthEC-DRPW Eastern Cape Department of Roads and Public WorksECSBP Eastern Cape School Building ProgrammeEDMS Electronic Document Management SystemEDRS Economic Development and Recreational ServicesEIA Environmental Impact AssessmentEIMS Electronic Invoice Management SystemEM Executive ManagerEPWP Expanded Public Works ProgrammeEXMA Executive Management CommitteeFAW First Automotive WorksFDI Foreign Direct InvestmentFET Further Education and TrainingFPL Forensic Pathology LaboratoriesFY Financial YearGBCSA Green Building Council South AfricaGDP Gross Domestic ProductGIS Geographic Information SystemHCS Human Capital SolutionsHDI Historically Disadvantaged IndividualHRD Human Resource DevelopmentHR+R Human Resources and RemunerationIA Implementing AgentICT Information and Communication TechnologiesICASA Institute of Chartered Accountants South AfricaID Infrastructure DevelopmentIDC Industrial Development CorporationIDZ Industrial Development ZoneIIRC International Integrated Reporting CouncilILO International Labour OrganisationIMS Integrated Management SystemIPAP Industrial Policy Action Plan<IR> Integrated ReportingIRC Integrated Reporting Committee (South Africa)

ABBREVIATIONS & ACRONymS

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“The investors themselves, all of the companies that have come here, have said one thing in common, that this is the best infrastructure and developed SEZ they have come across. They’ve been to mauritius, China, India – and they say ‘you’ve got it all here, this is really going to leap ahead’.”

“Coega has enormous potential to further broaden the economy of Nelson mandela Bay and the Eastern Cape. Investor interest and investment in the Coega IDZ is commendable.”

Joanmariae Fubbs MPChairperson: Portfolio Committee on Trade & Industry

Litho SukaChair: Select Committee on Economic & Business Development, NCOP

Dikobe Ben Martins & Dr Rob DaviesMinister of Energy & Minister of Trade and Industry (respectively)

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OUR STAKEHOLDERS SAY

“The investment of R600-million into the economy will create much needed jobs and promote an improvement in the lives of many people in this area. This investment also augurs well for South Africa’s position within the global automotive manufacturing network and proves once again that we have an attractive operating environment to host global multinational companies.”

“The growth potential of any investor in Coega is phenomenal. The opportunities are endless in terms of what we’ll take to the outside world, such as manufacturing, back office processing, agro processing, science and technology and in research.”

President Jacob zumaOpening the FAW plant

Bafedile RamatlhapeDIRCO

“Coega IDZ is a good story to tell.”

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APPENDIX 1

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CORPORATE PERfORmANCE RESULTS fOR THE 2014/15 fy

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2014/15 FY

Performance Measures Performance Target at Level 3

Actual Performance

% Achievement Score

Revenue Generated R407.6-million R441.8-million 108% 3.8

Number of New Investments Attracted 11 19 172% 5

Term Sheets/LOI 7 13

Lease Agreements 4 6

Value of Investment Signed R1.632-billion R1.889-billion 116% 4.3

Jobs Created 14 588 14 765 101% 3.1

Number of People Trained 5 595 8 147 145% 5

SMME Share of Overall Procurement 35% 46.17% 131% 5

Level in Annual B-BBEE Accreditation Level 1 Level 1 100% 3

No of Drivers Licensed 903 1 249 138% 5

Project Management Maturity Level 3.0 Level 3.34 111% 4.2

Risk Management Maturity Establishment of a baseline by August 2014

>15% improvement

4.2

Financial Management Maturity Establishment of a baseline by August 2014 Baseline achieved 3

ICT Governance Maturity Establishment of a baseline by August 2014 Below baseline 2

ISO Certification 80% success rate 40% success rate 2.25

Effectiveness of Supply Chain Management Processes

90% within stipulated period (12 weeks) 12.11 weeks 2.97

Staff Satisfaction Survey Score of 3.85 3.6 2.94

Corporate Score 3.89

BUILDING FUTURES: More than 14 765 jobs created in one year.


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APPENDIX 2

STAkEHOLDER mANAGEmENT

ThefollowingtableidentifiestheCDC’sstakeholdersandtheirareasofinterestandinfluence.

Stakeholder Group

Impact/Interest of the Stakeholder

Financial Sustainability of the Coega

IDZ

Environmental Impact of the Coega Project

Regulatory/Legislative

Impact

Business Opportunities

Training & Development

incl. SMME Support

Service Delivery

Job Creation

Socio-economic

Development

dti X X X X

Trade&Industry and Economic Development Parliamentary Portfolio Committees

X X X

Provincial & National Treasury

X X

Auditor-General X X

EC Provincial government

X X X X

Office of the Premier

X X X X X

NMBM X X X X X X

Ruling party in government (provincial and national)

X X X X

DEDEA X X X

Project Stakeholders-KZN DoE, EC DoH, Department of Rural Development and Land Reform

X X X X X X

Current Investors

X X X

Provincial & Local Economic Development Agencies, i.e. ECDC

X X X X X X X

Stakeholder Group

Impact/Interest of the Stakeholder

Financial Sustainability of the Coega

IDZ

Environmental Impact of the Coega Project

Regulatory/Legislative

Impact

Business Opportunities

Training & Development

incl. SMME Support

Service Delivery

Job Creation

Socio-economic

Development

CDC Board X X X X X X X

EXMA X X X X X X X

CDC Staff X X X X X X X

Potential Investors in the IDZ

X X X

Media X X X X X

EC Communities X X X X X X

Business Groups including Transnet

X X X X

Business Community including sector-specific, financial institutions, local Business Chamber; lobby groups and think tanks

X X X X X X

Education, training & development institutions local, provincial, national

X X X X X X

Political parties X X X X X X

Key Sectorial labour federations

X X X X X

Youth organisations local and provincial

X X X X X

Suppliers X X

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APPENDIX 3

AWARDS 2014/15 fy

The great strides made by the CDC in 2014/15 FY were reflectedintheorganisationreceivingninehigh-profileawards.Especially significant was that these awards were made bydiverse, credible organisations with varied constituencies, and they recognised the CDC’s performance in a range of areas, all of high strategic value to the organisation.

Environmental Sustainability

The CDC and Port of Ngqura jointly received a Gold Award for ‘Medium Organisation with a High Environmental Impact’ in the Eastern Cape Top Green Organisation Awards. The competition was coordinated and sponsored by the Eastern Cape Development Corporation (ECDC) and the Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) in partnership with the Institute of Waste Management of Southern Africa (IWMSA). The Top Green Organisation Awards recognise the achievements of organisations that comply with legislation, environmental management principles, and green economy initiatives such as waste management, biodiversity and air quality.

Performance and Leadership

The CDC won the National Business Awards in the categories of Infrastructure Development and Top Performing Public Service, along with Marketing & Communications head Dr Ayanda Vilakazi, who was named the country’s 2014/15 Top Young Business Executive of the Year (under 40 years).

CDC won the Top Performing Public Service award for the second year in a row. The Infrastructure Development Award is awarded to an organisation with an annual turnover over R35-million, and recognises sustainable and efficientinfrastructure development. The Top Young Business Executive award highlights the achievement of a young business executive who has contributed to the positive success and performance of an organisation through innovative strategies and solutions that deliver customer and shareholder value.

Employer of Choice

TheCDCwastheonlygovernmentorganisationtobecertifiedas a Top Employer in the Public Sector in 2014/15 FY. The certification isbasedon international researchconductedbythe Top Employers Institute globally, and independently audited, to recognise leading employers around the world that provide excellent employee conditions, nurture and develop talent throughout all levels of the organisation, and which strive to continuously optimise employment practices.

Customer Service

The Eastern Cape Exporters’ Club recognised the CDC as the Best Provider of Services to Exporters in its sought-after annual awards.

Empowerment

The CDC won the Most Empowered Enterprise category in the SA Premier Business Awards 2014. The award encourages and promotes compliance with Broad-Based Black Economic Empowerment (B-BBEE) and speaks to the development of small, micro and medium enterprises (SMMEs), promoting adherence to the codes of good practice, socio-economic development as well as adherence to procurement codes and policies.

Job Creation

The Oliver Empowerment Awards recognised CDC’s contribution to poverty alleviation through creation of sustainable, meaningful employment with a Job Creation Award. The CDC was also one of four recipients of a RAIZCORP bursary to the value of R250 000, to be awarded to a black business owner from the CDC’s supply chain.

Visionary Leadership

CDC CEO Mninawe ‘’Pepi’’ Silinga’s visionary leadership of the CDC since its founding in 1999 was recognised by the NMMU Council with its Prestige Award at the end of 2014. The award is reserved for individuals whose distinguished service has madeasignificantimpactonsocietyinanyfieldthatsupportsthe social or educational mission of the University. One of the longest-serving chief executives of a public sector organisation, Silinga was acknowledged for his commitment to social equality and justice, and the formidable leadership that has contributed to vibrant socio-economic growth in the Eastern Cape.

WINNING TEAM: The CDC team pose with the Best Provider of Services to Exporters prestigious award from the Exporters Club.

CELEBRATIONS: CDC staff celebrated the organisation’s continued success by winning the Top Empowered: Public Service Award and the Job Creation Award.

CERTIFIED TOP EMPLOYERS: The CDC was elated after winning the Top Employers South Africa 2015 award: Public Sector.

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CDC Achievements and Best Practices to date: Period

Eastern Cape Top Green Organization Awards: Gold Award 2015

National Business Awards: Infrastructure Development & Top Performing Public Service 2015

Top Employer in Public Sector 2015

Best Provider of Services to Exporters 2014

Most Empowered Enterprise 2014

Job Creation Award 2014

B-BBEE Level 1 Accreditation 2014

Customs Control Area Zone 2 2014

Top Employer of Choice South Africa 2014

Job Creation Award 2014

Top Performing Parastatal/Agency of the Year 2013

Merit Awards: Major Accomplishment 2013

BEE Certification Programme 2013

Best Performing Parastatal 2013

Enterprise Development Awards: Best Company with Most Jobs Created 2012

Transport Africa Award: The Best Leading Contractor Development Programme 2011

Kamoso Award: State Enterprise Supporting EPWP 2009

Big-news National Enterprise Development Award 2007

Unqualified (Clean Audits) Audit Opinions since establishment 1999

ISO Certifications: 9001; 14001; 18001 1999


MAJORINDUSTRYPLAYER:ALEHeavyliftSouthAfricaisthefirstprojecttenant located at the 12 hectare laydown area in the Coega IDZ.

E-mail: [email protected] | Website: www.coega.co.za


Corner Alcyon Road & Zibuko Street, Zone 1, Coega IDZ, Port Elizabeth 6100Coega Development Corporation. P/B X6009, Port Elizabeth 6000, South AfricaTel: +27 (0) 41 403 0400 - Fax: +27 (0) 41 403 0401E-mail: [email protected] - Website: www.coega.co.za

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